1995 (3) TMI 465 - HC - VAT and Sales Tax

Summary

Issues:
1. Provisional assessment under Andhra Pradesh General Sales Tax Act, 1957.
2. Validity of garnishee orders under section 17 of the Act.
3. Justification for issuing fresh garnishee order against the bankers of the petitioner.
4. Legal implications of existing garnishee order against the third respondent.

Analysis:

The judgment pertains to a case involving a provisional assessment against the petitioner under the Andhra Pradesh General Sales Tax Act, 1957, resulting in an additional tax liability of Rs. 70,00,000 for the months of June and July 1994. The petitioner's appeal and stay application were rejected, leading to the issuance of garnishee orders under section 17 of the Act. The petitioner challenged a subsequent garnishee order against the second respondent, the petitioner's bankers, while the first garnishee order against the third respondent was still in effect.

The petitioner argued that since the third respondent still owed the petitioner an amount exceeding the outstanding dues demanded by the department, issuing a fresh garnishee order against the second respondent was unjustified under section 17 of the Act. The Government Pleader contended that the Sales Tax Department had the authority to issue garnishee orders against any debtor as long as amounts were due from the petitioner.

The Court, led by Ag. C.J. K.M. Agarwal, found the department's actions unwarranted. The first garnishee order against the third respondent remained in force, with a partial payment made to the Department. As the third respondent had not denied further indebtedness to the petitioner, the Court deemed the issuance of a new garnishee order against the petitioner's bankers unjustifiable. Consequently, the Court allowed the petition, quashing the impugned garnishee order dated February 28, 1995.

In conclusion, the Court ruled in favor of the petitioner, allowing the writ petition and quashing the impugned notice/order under section 17 of the Andhra Pradesh General Sales Tax Act, 1957, issued against the second respondent. The judgment clarified that the second respondent must honor the petitioner's cheques without considering the now-quashed garnishee order. No costs were awarded in the matter.