Question

Under which Article of the Constitution, a state can impose tax on inter-state trade with the prior approval of the President?

• A. Article $302$
• B. Article $303$(I)
• C. Article $303$(II)
• D. Article $304$

Answer 1

Answer: (D)

Article $304$

The Constitution of India has distinguished the taxation powers of Centre and State. For this purpose, the seventh schedule of Indian Constitution has divided taxable subjects into Union List where Parliament can make laws , State List where State legislature has power to make rules and Concurrent List where both Centre and State has the power but in case of conflict Centre's rule prevails. Moreover under part $XIII$ of the constitution, provisions related to Inter-state trade and intercourse has been embedded.

Article $302$ provides for the Parliament's power to restrict trade, commerce and intercourse.

Article $303$ talks about restrictions on the legislative powers of the Union and of the States with regard to trade and commerce.

Article $304$ allows the State to impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest with prior approval of President.