Case Analysis:Atiabari's case.

ATIABARI TEA.CO. LTD.

VS

THE STATE OF ASSAM AND OTHERS. AND CONNECTED  PETITION AND

INTRODUCTION:

The Constitution of India is the supreme law of the country. There are provisions in the bill that ensure the free flow of trade and commerce across the Indian Territory. Article 19 (1)(g) of Part III and Articles 301-307 of Part XIII of the Constitution deal with an individual's freedom to engage in any trade, business, or occupation, as well as intercourse, inside the Indian territory. Article 19 (1)(g) of Part III of the Indian Constitution grants citizens the Fundamental Right to engage in any profession, trade, commerce, or business while on Indian soil. "All citizens shall have the right to practice any profession, trade, or business," says Article 19 (1) (g). This article assures that all citizens have the freedom to practice any profession, carry out any occupation, and engage in any trade or business of their choice. This fundamental right, however, is not absolute and is subject to some legitimate limitations imposed by the state. 

CASE:

PLAINTIFF: 

ATIABARI TEA.CO. LTD.

VS

RESPONDENT:

THE STATE OF ASSAM AND OTHERS. AND CONNECTED  PETITION AND

DATE OF JUDGMENT:

16/08/1960

BENCH:

SINHA, BHUVNESHWAR P.(CJ)

BENCH:

SINHA, BHUVNESHWAR P.(CJ)

GAJENDRAGADKAR, P.B.

WANCHOO, K.N.

GUPTA, K.C. DAS

SHAH, J.C.

CITATION:

 1961 AIR  232   1961 SCR  (1) 809

BACKGROUND:

The Indian Constitution, in Article 301, specifies the freedom of trade, commerce, and intercourse. Trade, commerce, and intercourse shall be unrestricted throughout India, subject to the other requirements of this Part. The appellants challenged the Act's validity because (1) the Ac, its rules, and notifications were ultra vires the Constitution, as the tax on tea carriage through Assam was infringing on the freedom of trade, commerce, and intercourse, and (2) the Act, its rules, and notifications were ultra vires the Constitution. 

FACT:

In Calcutta, the plaintiffs were in the tea business. The tea was shipped from Calcutta to other parts of the country and even to other nations for consumption. A huge quantity was conveyed across the roads and waterways in this trade. With the Governor's consent, the Assam Tax (On the Goods Transported Through Roads and Water Ways) Act(No. XIII),1954 was approved in the legislative assembly of Assam. This Act imposed a levy on items that were moved by road and inland waterways. After the Act went into effect, tea that was traveling through Assam for shipment to Calcutta was subject to taxation under the Act. As a result, Article 301 of the Constitution was deemed to be violated. The plaintiffs filed a challenge to the Act's legitimacy in the High Court under Article 226 of the Constitution. The plaintiffs' writ petitions were dismissed by the High Court. Following that, the plaintiffs got certificates from the High Court stating that the case raised a major matter of law concerning the Constitution's interpretation. Then, under Article 32 of the Constitution, petitions were filed in the Hon'ble Supreme Court challenging the Act's constitutionality. 

JUDGEMENT:

The court concluded that Art.301 did not apply to the levy because it was a compensation tax charged for the use of state-maintained highways. Thus, Automobile had effectively overruled the majority view in Atiabari. Since then, the notion of regulatory and compensatory taxes has become established in India concerning List II entries 56 and 57, and the concept has been applied in various cases, and the courts have gradually liberalized the concept so that state taxation at a higher level is permitted. 

In simple terms, According to the Supreme Court, the impugned law imposed a levy that directly and immediately impeded the transportation of commodities, and thus it falls inside the ambit of Article 301. The Supreme Court further highlighted that these taxes can only be imposed after meeting the requirements of Article 304(b), which specifies that the President's approval is required before any state enacts such a statute. Article 304(b) standards were also not met in this case. If the transmission of products is hindered without meeting the standards set out in Articles 302 to 304 of the Constitution, the freedom guaranteed by Article 301 becomes non-existent or illusory. 

CONCLUSION:

Changes should not be changed in Article 301, the article was correct. The freedom provided by Art. 301 did not imply freedom from simple taxes, but rather a freedom from the building of trade obstacles, tariff walls, and imposts that hampered the free flow of trade, commerce, and intercourse. The Assam Act was a simple taxing act that did not suffer from any of the vices that Part XIII of the Constitution was meant to combat. The freedom of trade guaranteed by the Constitution cannot be absolute. As a result, Articles 302 to 305 place controls on trade and ensure that it is conducted lawfully throughout the states and the country. All of these articles, taken collectively, establish that the freedoms of trade, commerce, and intercourse have Constitutional validity. At the very least, there would be no unjustifiable impediments to trade and commerce based on geographical differences or other factors.