Garnishee tax notice covers only funds held at notice date, and later transactions are not attached.

A garnishee-type tax recovery notice attaches only to money due to, or held for, the assessee at the time of notice. Once the bank remitted the amount then standing to the assessee's credit, the notice was satisfied and exhausted. A later demand draft was not covered because liability under the notice depended on a subsisting relationship and existing funds at the date of notice. Applying the same principle recognised under section 46(5A) of the Indian Income-tax Act, 1922 to section 17(1) of the Andhra Pradesh General Sales Tax Act, 1957, the HC held that the bank did not violate the notice.

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Issues: Whether the bank violated the sales tax department's notice by allowing encashment of a demand draft after it had already complied with the notice by remitting the amount then lying to the credit of the defaulter.

Analysis: The notice operated only in relation to amounts then held by the bank for the defaulter. Once the amount standing to the credit of the assessee on the date of notice was paid over, the notice stood satisfied. The later demand draft was not covered, because the liability under the notice depended on the existence of a subsisting relationship and of money then due or held for the assessee. The same principle governing section 46(5A) of the Indian Income-tax Act, 1922 was applied to section 17(1) of the Andhra Pradesh General Sales Tax Act, 1957, as both provisions used similar language and the earlier Supreme Court decision governed the facts.

Conclusion: The bank did not violate the departmental notice and the writ petition was allowed.

Ratio Decidendi: A garnishee-type notice under a tax recovery provision reaches only money due or held for the assessee at the time of notice, and once that amount is paid, the notice is exhausted and cannot attach later transactions absent a subsisting relationship.

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