HEADNOTE:

In exercise of the powers conferred by sub-section (2-a) of section 31 of the Bihar Finance Act, 1981 the Commission- er of Commercial Taxes, Bihar issued a Notification dated 28th December, 1985 adopting Forms XXVIII A and XXVIII B as the declaration for the purposes of verification and assess- ment of the sales-tax payable. Clause 1 of the Notification provided that a person transporting goods, exceeding the quantity notified under section 35, on a goods carrier or a vessel shall carry Form XXVIII A or XXVIII B duly filled up in respect of goods being brought into the State or being sent out of the State. Clause 2 of the Notification provided that in case a form is found blank or not containing all the particulars, it shall be deemed to be a violation of the provisions of sub-section (2-a) of section 31 of the Act.

The respondent, a registered dealer under the Bihar Sales Tax Act and the Central Sales Tax Act purchased 165 bags of mustard in the State of Rajasthan and was transport- ing the same therefrom to 797 Jamshedpur in the State of Bihar. The officers of the Inves- tigation Bureau Jamshedpur Division seized the vehicle along with the goods on the ground that in the road permit the bill number had not been mentioned in column No. 9 in Form XXVIII B. On a representation by the Singhbhum Chamber of Commerce and Industry the truck along with the goods was released. The Inspecting Officer issued a demand notice to the respondent imposing a penalty of Rs.8,330 and rejected the contention of the respondent that no permit was neces- sary because it was violative of the respondent’s Constitu- tional right of freedom of inter-State trade and commerce.

The appellant filed a writ petition in the Patna High Court challenging the validity of the Notification on the ground of its being violative of Articles 301 and 304 and also the demand notice imposing penalty.

The High Court held that the Notification imposed unwar- ranted restrictions on the inter-State trade and commerce and accordingly quashed the Notification as violative of Articles 301 and 304 and set aside the penalty order with demand notice.

In this appeal by special leave on the question whether the impugned Notification and the adoption of Forms XXVIII A and XXVIII B, for the purposes of preventing evasion of sales-tax, was violative of Articles 301 and 304 of the Constitution.

Allowing the appeals and setting aside the judgment of the High Court, HELD: 1. Article 301 mandates free trade, commerce and intercourse-throughout the territory of India. The words "throughout the territory of India" extends the freedom not only to inter-State but also to inter-State transactions and movements. The mobility of goods throughout the territory of India has to be free. Free trade throughout the territory of India would be one with no tariffs and no restrictions or disadvantages of any kind of importing or exporting from the different States. Free trade means complete freedom of inter-State trade without any restrictions on the movement of goods between the States. Anyone aggrieved by infringe- ment of the provisions of Article 301 can seek his remedy from the Court against the offending legislative or execu- tive action. [808C-E]

2. The word ’trade’ has been used synonymously with the word 798 ’business’. Trade or business would mean some real substan- tial and systematic or organised course of activity or conduct with a set purpose. [808E] State of Bombay v. R.M.D. Chamarbaug-wala, [1957] S.C.R. 874, applied.

3. Freedom under Article 301 does not mean absolute freedom but freedom from all restrictions and barriers except those which are provided in other Articles of Part XIII as well as regulatory and compensatory measures. The object of Part XIII is not to make inter-State trade, com- merce or intercourse absolutely free. Reasonable restric- tions in public interest are permissible. The reasonable restrictions contemplated in Part XIII have to be backed by law and not by execu