In Brief
The Supreme Court, by majority, held that non-discriminatory taxes levied by States do not violate Article 301 (freedom of trade, commerce and intercourse) of the Constitution. The Court rejected the 'compensatory tax' doctrine evolved in earlier cases, holding it had no constitutional basis. The word 'free' in Article 301 does not mean 'free from taxation' but rather freedom from discriminatory fiscal barriers. Taxes form part of sovereign legislative power and cannot be treated as restrictions under Part XIII except where discriminatory. The Court held Articles 304(a) and 304(b) are disjunctive: only Article 304(a) applies to taxes, while Article 304(b) applies to non-fiscal restrictions, eliminating the requirement for Presidential sanction under Article 304(b) for tax legislation.
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