India is perhaps the only country in the world which has amended even the preamble to the constitution. Apart from adding the qualification to the republican form of government, that India is to be a 'socialist and secular' republic and not merely a 'sovereign and democratic' one, the amended Preamble seeks to assure the Nation's 'integrity', too. The managers of the Indian republic were not satisfied with the assurance about its 'unity' alone as in the original Preamble. The question is: How is that 'unity' and 'integrity' of the nation treated in the Constitution?

All the citizens of India have the fundamental right under Article 19(1)(d) and (e) of the Constitution to move freely and to reside and settle in any part of India. The State of Jammu and Kashmir enjoys a certain special status in this respect under Article 370. Coupled with the right guaranteed by Article 19(1)(g) to practice any profession, or to carry on any occupation, trade or business, the rights under Article 19(1)(d) and (e) -subject to reasonable restrictions, ensure to the citizens freedom of trade and commerce throughout the territory of India.

However, the framers of the Constitution thought it fit to provide further specific protection to the integrity of the country with respect to traffic of people and goods and, therefore, devoted a whole part to that purpose. Part XIII of the Constitution entitled, "Trade, Commerce and Intercourse within the Territory of India," seeks to keep these activities between the states and between all other parts of the country free from legal interference. Part XIII does not discriminate between citizens and non-citizens. The rights granted under it are in the form of a prohibition on legislative and executive competence.

Thirteen is supposed to be an unlucky number as has proved to be in the case of Part XIII of the Constitution. This Part has failed to preserve inter-territorial trade and commerce free from legal encumbrances, check-posts and barriers based on borders, as well as the most debilitating barrier, namely taxation. The purpose of the constitutional provisions, as may be observed from Article 304(a), was not only to remove checkposts and barriers on regional borders, but also to discourage State-supported parochialism within those borders. But the 'unity' and 'integrity' of the nation, to ensure which even the Preamble to the Constitution was amended, so that no law made under a power granted by the Constitution should operate in their breach, have been sacrificed on the altar of indirect taxation.

The unlucky Part XIII of the Constitution was born with a defect. Laws that existed at the commencement of the Constitution, on January 26, 1950, even if in contravention of this Part, continued to be in force. Entry 52 of the State List, specifying tax on the entry of goods into a local area, cannot be reconciled with the provisions of the Constitution. Part XIII was grossly undermined by the Central Sales Tax in 1956 by which interstate sales were taxed. In the name of abolishing octroi, Entry Tax was imposed which brought about with it customs barriers of sorts on state borders. The Forty-sixth Amendment, 1982, which authorises what is known as consignment tax, virtually sentenced the unfortunate Part XIII to death though its execution has not yet been carried out.

Even the Supreme Court found itself reluctant to correct the flaw by intelligent interpretation. The original intention of the founding fathers of the Constitution in the matter of 'free' inter territorial commerce were eroded and finally subverted by the consignment tax, even though freedom of interstate commerce was guaranteed by Article 301.

Article 302 authorises Parliament to impose restrictions in the public interest. Article 303 prohibits state preference or discrimination on regional basis, but makes an exception for Parliament in order to meet a situation of scarcity in any part of the country. Article 304 prohibits the states from making any discrimination against goods 'imported' from other states in taxing them. It only authorises the states to impose 'reasonable' restrictions in the public interest with the sanction of the President. Article 305 removes the laws, as they existed on January 26, 1950, and later at the commencement of the Fourth Amendment, 1955, from the operation of Article 301 and 303. Article 306, now repealed, dealt with the former Native States authorising them to levy import-export duties on the goods to and from the rest of the country in accordance with the terms of their accession.

Article 307 envisages an authority appointed by Parliament to carry out the objectives of the first four Articles of this Part. NO such authority has ever been constituted. Part XIII allows reasonable restrictionsimposed by the states in the 'public interest.' One is strongly inclined to think that a tax is always in the public interest and, therefore, the prohibition does not apply to it.

The Supreme Court in the Atiabari Tea Co. case held that taxes which hampered free flow of trade and commerce contravened Part XIII and, therefore were unconstitutional. The Court qualified this decision in the Automobile Transport case and ruled that regulatory and compensatory' taxes did not come within the purview of Article 301.

'Public interest' is a very wide term. To be weighed against a specific prohibition, the public interest served has to be a substantive one. For a constitutional prohibition to be lifted in favour of the public interest, it is not enough to show that a general public interest is being served by acting against the prohibition. It should be positively demonstrated that if such an action is not taken, the public interest would suffer.

A huge fire tender may enter from the wrong end of a one-way street, but the same driver otherwise cannot ride his moped from the same end of the street. In the former instance, a specific public interest is served, because the fire is sure to spread during the delay caused by observation of the traffic rules. Firefighting, a public interest, has by its nature ascendancy over the general prohibition imposed by traffic rules, which are also imposed in the public interest. Thus if a prohibition is to be ignored in the public interest, that public interest has to be specific, clear and immediate, and there should be no other way open to achieve the same ends.

No such demonstration is possible in respect of taxes, because there are other non-prohibited avenues open for raising revenue. Taxes are always presumed to be in the public interest but that is not so in the case of prohibitions. It is a case of one public interest pitted against another in which the specific prohibition in Part XIII, must win against the general provision imposing taxes. It is nobody's case that the constitutional prohibitions, or for that matter, the Constitution itself, are not in the public interest; for all acts of a government, legislative or executive, cannot but be in bona fide public interest though they may be legal or illegal.

A 'freedom' qualified by imposition of taxes is, in this context, worse than a plain and simple total restriction. A welcome sign at the door of a household must necessarily carry a different meaning than the same sign hung over the gates of a cinema or a circus. It is the former kind of freedom that the founding fathers originally prescribed in Part XIII of the Constitution, but slowly and surely it is being transformed into the latter type of categorical prohibition. To say 'If you cannot, or don't want to pay, please do not cross the border,' is worse than saying, 'Please do not cross.' The former displays unabashed avarice for money while the latter may hide under its harshness some strain of public interest.

A tax may incidentally regulate a subject. In fact, it may have been imposed for the very purpose. Even then, that fact does not affect its character as tax, plain and simple. Similarly a tax cannot be said to be compensatory, because it has been imposed against enjoyment of a certain service being rendered by the state. Here again the element of compensation is incidental. All taxes are revenue measures and must need be treated as such.

In the colonial era, municipal governments were supposed to levy compensatory taxes because their very existence was meant for carrying out certain specific tasks. The taxes collected by them came to be viewed in the background of those tasks. If any of the local bodies failed to perform such tasks properly, any taxpayer could appeal to the government for its 'supersession.'Under the Constitution all taxes are to form one single consolidated fund at the Union as well as in each state, and the amounts collected are to lose their identity of source and destination. No segregation in this area can be made. Municipal funds have maintained their separate identity by force of usage though there is no mention of these funds in Article 266 which established the Consolidated Funds. Otherwise, the power to create 'local' funds must be treated to be inherent in the power to create 'local' governments. But the crucial question is: "What is the status of the 'local fund' when the local 'government' is taken over by the parent government? "

Hence, a promise by the government to spend the proceeds of a tax for this or that purpose can only be a part of public policy or political propaganda, and not a matter of obligatory law. Nor can the court, even after describing a tax as compensatory, entertain any claim as to inadequacy of 'compensation.' Therefore the terms 'regulatory' and 'compensatory' are just labels to identify the kind of taxes that may be imposed without contravening Part XIII.

The real problem here is not of taxing inter-territorial 'trade, commerce and intercourse', but one of determining at what points that inter-territorialness of trade, commerce and intercourse begins and ends; and when does a subject cease or start to be 'within' the jurisdiction of a regional authority. For no such subject can be 'regulated' or 'compensated' unless it comes within the jurisdiction of that authority as that (region-al) authority does not have extra-territorial jurisdiction.

Take, for example, a bus carrying passengers from Kanyakumari to Kumau. In the course of its journey it has to traverse several states. In each of these states it has to submit to local traffic rules. Just because it is carrying interstate passengers, it cannot jump a traffic signal or flout the directions of the constable-in-charge. Nor does the traffic rule need Presidential Assent under Article 304(b) to make the bus submit to it. If the bus meets with an accident, it will be governed by the rules prevailing at the scene of the accident. In both cases, its identity as the one engaged in interstate activity is not relevant. It must lose itself in the stream of local traffic which is the very purpose of Part XIII.

At the state border 'checkpost' the authorities may require the driver to show his driving licence or the permit to ply his vehicle on the state roads, in the absence of which they must issue such permit. But they cannot require the passengers to have permits, either for their persons or for their luggage, for entry into the state. And if they cannot ask for permits for such entry, they surely cannot make the same process, namely entry into a state or a region, a taxable activity.

The distinguishing feature between the permissible and non-permissible exercise of power is that, while the driving licence and the road permit are for everybody, including those in the state, and may be inspected anywhere in the state (the inspection at the border checkpost being only incidental), the border itself is a vital ingredient in the latter -nonpermissible case. It is this kind of border that Part XIII intended to abolish. But, alas! Instead of vanishing away, the borderlines have multiplied and become more prominent.

This phenomenon may be called the 'Viramgam syndrome.' Before Independence, Kathiawar (the later day Saurashtra, now a part of Gujarat) formed the greatest cluster of Indian princely states or principalities, quite a few of which were no more than a few acres in area. By rail, Viramgam served as the gateway to those 'states.' As soon as a train arrived, the compartments were locked up so that nobody could get down except under the supervision of customs officials. After usual inspection and payment of duties, if any, the passengers would proceed to their destinations in the princely states or in British India. After forty years of Independence and in spite of Part XIII and Article 19 (1)(d),(e) and (g) of the Constitution, Viramgam type of procedures are found on all state borders, thanks to the penchant in our governments for indirect taxation. Some states require permits for 'import' of goods for sale in their territory on the plea that it is a necessary measure to check evasion of the state sales tax. The Constitution was not only ignored but mutilated when its provisions were watered down just to facilitate tax collection instead of moulding the collection to suit those provisions. Even if such permits were constitutionally in order, they could be required only by the Union as interstate trade and commerce, under Entry 42, is a Union subject. The states cannot put such a restriction, even with presidential assent, under colour of preventing evasion of a tax imposed by them.

Article 306 in Part XIII was meant precisely for pre-Independence Viramgam-type cases. It was to avert disruption of financial affairs of the erstwhile principalities that the custom duties collected by such states at the commencement of the Constitution were continued by the Article. The provision was to last for a maximum period of ten years, but in the seventh year in 1956 the classification of groups of such states, forming Part B of the First Schedule, was itself abolished by the Seventh Amendment. The same Amendment repealed Article 306 also, its utility having been exhausted.

It is significant that while the marginal note to the Article spoke of restrictions, its contents were all about taxes. That should put to rest any doubt about a tax constituting a restriction for the purposes of Article 301. Of course, it is not the tax as such, but the border on which it is based, that is abhorred by Part XIII. The Constitution is cross at boundaries.

Like Article 306, Article 305 also allowed the laws existing at the commencement of the Constitution to continue even if they contravened Part XIII. The laws levying octroi is one example. There was no question at the time, of continuing inter-provincial, or as we know it, the Central Sales Tax. The 'existing' laws were to continue in force till the President ordered otherwise. With regard to octroi, in the forty years of the Constitution the President is yet to uphold the rule by abolishing the exception. Instead, it appears that the exception has not only become firmly rooted, but is expanding, as evidenced by the levy of entry tax, while the rule remains suspended. Unfortunately for the rule, there is no time limit in Article 305 as was in Article 306 for conforming to the rule.

Entry 52 0f the State List, Seventh Schedule, mentions taxes on the entry of goods into a local area for consumption, use or sale therein. As stated earlier, Entry 52 cannot be reconciled with the specific provisions of the Constitution. It is entirely incompatible with those provisions. It is significant that even after a decade (in 1962), the Supreme Court in the Bangalore Corporation case upheld 'new' particulars of the levy on the plea of surviving laws under Article 305 and declined to go into the merits of Entry 52.

The entries in the Seventh Schedule do not by themselves create any power. Their function is to specify the fields in which the power conferred by the Constitution is to operate. That power may again be limited both as to the scope as well as to the manner of operation by the Constitution and its context. If power were to flow from these entries, the United Nations would become subject to the Indian Parliament (Entry 12, List I). The Parliament would also derive authority to create 'Indian States' from Entry 34, as it can appoint courts of wards for the estates of rulers of 'Indian States' when both, the rulers and their states have become a part of history.

One may take for another example Entry 77 in List I. It pertains to the Supreme Court and is couched in terms too wide to be warranted by the specific provisions about the Court in the Constitution. On the basis of the Entry alone, one might think that Parliament has the power to regulate, even abolish, the Supreme Court. But, it may be readily seen from the relevant provisions of the Constitution that the Court happens to be as permanent a part of the scheme of our governance as the Parliament, and the latter has very little, if any power over the former. Entries 95 of List I, 65 of List II, and 46 of List III give more correct picture though they also are prey to the same error where the High Courts are concerned. Whereas Entry 77 of List I has partial efficacy, Entry 52 of List II has none whatsoever being in direct conflict with the specific provisions of the Constitution contained in Part XIII. The other such entry is Entry 81 of List I. There cannot be any question of inter-state migration in the Republic of India. Any Indian citizen can migrate from one state to another in the Indian Republic as easily as he can shift his home in the same city. It does not require immigration laws for the purpose.

For availing of the 'power' in Entry 52 of List II in the Seventh Schedule, the opening words of Article 245, "subject to the provisions of this Constitution" will have to be rendered meaningless. Even if the words had not been there, the Schedule could not have been so interpreted as to violate the text of the Articles. The Schedule can supplement, but cannot override the Articles.

There is, therefore, no question of attempting to harmonise the Entry with the provisions of the Constitution as there would be if the conflict were between those provisions in the Articles. Nor can the plea of public interest be sustained in favour of a tax against an express prohibition, in this case, that there shall be no barriers. The prohibition itself is in public interest being part of pronounced public policy translated into binding constitutional law. And so, Octroi is an aberration of the Indian Constitution. It is not supported by any Article of the Constitution except Article 305 and is actually barred by Part XIII and Article 19. It has survived as a British legacy. The term 'existing laws' in Article 305 should have been very strictly defined so that it did not become a licence to act in breach of the Constitution. The Supreme Court clearly failed in this task, in the Bangalore Corporation case, when it allowed the 'existing' levy to be changed in favour of the tax after the commencement of the Constitution. It could never have been the intention of the makers of the Constitution to provide in the guise of 'existing' laws a parallel constitution with diametrically conflicting provisions.

The Constituent Assembly did not give us any extra-constitutional or parallel constitution in the form of 'existing' laws against which to test contemporary action for their constitutional validity. Therefore, any change in the application of an 'existing' law or any departure from status quo, whether brought about by legislative or executive action, has to be tested on the touchstone of the Constitution minus the provisions about the continuance of 'unconstitutional' laws after January 26, 1950.

The Constitution does not admit of any amendment in the text or application of an 'existing' law that does not conform to its substantive permanent provisions. Provisions like Article 305 had their utility exhausted on January 26, 1950 itself after having served their purpose namely providing validity to otherwise 'unconstitutional' laws. In short, any change that adds to the prevailing efficacy of an 'existing' law that has been preserved in spite of the other permanent provisions of the Constitution, is repugnant to the Constitution and, therefore, void. Such 'existing' laws are not meant to be a permanent feature of the Constitution.