Notwithstanding anything in article 301 or article 303, the Legislature of a State may by law —
(a) impose on goods imported from other States 1 [or the Union territories] any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced; and
(b) 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:
Provided that no Bill or amendment for the purposes of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President
Article 274D (Article 304 of Constitution of India 1950) was not included in the Draft Constitution, 1948. The Drafting Committee Chairman introduced this Draft Article on 8 September 1949 along with other Articles under Part XA.
The Draft Article conferred the State Government with the power to put restrictions on freedom of trade, commerce, and intercourse.
Some members argued that the rights of trade, commerce, and intercourse must be ‘absolute’, and must only be curtailed in situations of scarcity or national emergency. They felt that the idea of unity would be defeated if the Central Government made general policies for the whole country, while the State Governments could make specific rules giving preferential treatment to the people of their respective States.
A few members also stated that the Article was in contravention with the other rights provided by the Constitution which include:the right to move freely throughout India, the right to visit and/or settle in any part of India, the right acquire and hold property in any part of India and the right to practice any profession or carry out any trade or business in ay part of India.
Criticisms of the Draft Article rejected on grounds that trade and commerce could not be completely free and needed some direction by the Government. A member, contended that the State Governments could be given a reasonable amount of power to restrict trade and commerece. He felt that the ultimate power to make uniform national policies would remain with the Parliament and that State Governments could not go against them. Moreover, the Article had a safeguard in the form of mandatory assent of the President.
The proposed new Part XA, and the Draft Article 274D was adopted by the Assembly on the same day.
The Article was amended by the Constitution (Seventh Amendment) Act 1956, which added Union Territories to 304(a).