FREEDOM OF TRADE AND COMMERCE IN INTERACTION WITH STATE TAX LAWS

Abstract

The interaction between state tax laws and the freedom of trade and commerce in India has been a significant aspect of the country’s economic and constitutional framework. Enshrined under Article 301 of the Indian Constitution, the freedom of trade and commerce aims to ensure the seamless movement of goods and services across state borders, fostering national economic integration. This paper explores the role of the Constitution in promoting economic integration, while analyzing the potential conflicts that arise from state-level taxation and regulations. State tax laws, although essential to India’s federal structure, can create barriers to free trade, leading to inefficiencies in inter-state commerce. These conflicts, manifested in the form of entry taxes, tolls, and varying tax rates, often undermine the constitutional objective of a unified economic market. The introduction of Goods and Services Tax (GST) is a significant step toward reducing these barriers and streamlining the tax system across states, but challenges in its implementation persist. By examining the relationship between state tax laws and trade freedoms, this paper highlights the need for a balance between state autonomy and national economic integration. The paper concludes by reflecting on the constitutional framework's effectiveness and the ongoing challenges in reconciling state-level taxation with the freedom of trade.