Expanded unit exemption turns on base production, including stock transfer and consignment transactions, under the larger Bench ruling.

An expanded industrial unit governed by Notification No. 640 dated 21.2.1997 is treated as eligible for exemption on turnover representing production above the base production level, and base production includes stock transfer and consignment transactions. The larger Bench ruling displaced the earlier contrary view, making review maintainable and requiring recall of the prior order. On that footing, notices issued on the basis of the overruled interpretation and circular directions could not be sustained, and fresh proceedings had to conform to the larger Bench ruling.

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Issues: Whether, in light of the larger Bench ruling, an expanded industrial unit was entitled to exemption on turnover exceeding the quantity of base production and whether stock transfer or consignment transaction formed part of base production, with the consequence that the impugned notices deserved to be quashed.

Analysis: The larger Bench had authoritatively held that under Notification No. 640 dated 21.2.1997 an expanded unit is entitled to exemption on the turnover of quantity in excess of the quantity of base production plus stock of the base production of the previous years. It further held that base production includes stock transfer and consignment transactions, and that the earlier Division Bench view in the related matters did not lay down the correct law. Since the earlier judgment in the present matter had been overruled by the larger Bench, the review was maintainable and the order dated 18.12.2007 required recall. In consequence, the notices issued by the Assessing Authority, which proceeded on the contrary view and on the circular directions, could not be sustained.

Conclusion: The review was allowed, the earlier judgment was recalled, and the writ petition was allowed by quashing the impugned notices and directing fresh proceedings in accordance with the larger Bench ruling.

Ratio Decidendi: For an expanded unit governed by Notification No. 640 dated 21.2.1997, exemption extends to turnover beyond base production and the base production includes stock transfer and consignment transactions.

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