Garnishee recovery under sales tax law survives later payment to the dealer where notice was served and liability was admitted.

Section 48 of the Gujarat Sales Tax Act, 1969 creates a special garnishee recovery mechanism enabling recovery from a person indebted to a dealer for tax arrears. Where notice was served on the firm and a partner appeared and admitted the debt in writing, the subsequent payment to the dealer after service of notice did not defeat the statutory liability. The record also showed that the firm had an opportunity to be heard, so the proceedings were not vitiated by breach of natural justice. The recovery action was therefore upheld and the petitioners were not entitled to relief.

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Issues: (i) Whether the petitioners, as partners of the debtor-firm, remained liable under the garnishee recovery mechanism after the firm's alleged dissolution and after payment was made to the dealer subsequent to service of notice; (ii) whether the proceedings under section 48 of the Gujarat Sales Tax Act, 1969 were vitiated for want of proper hearing or breach of natural justice.

Issue (i): Whether the petitioners, as partners of the debtor-firm, remained liable under the garnishee recovery mechanism after the firm's alleged dissolution and after payment was made to the dealer subsequent to service of notice.

Analysis: Section 48 provided a special mode of recovery by enabling the Commissioner to require a person indebted to a dealer to pay the amount due towards the dealer's tax arrears. The notice was served on the firm, and one of its partners appeared before the authority and admitted in writing that the firm owed money to the dealer. The record also showed that payment was made to the dealer only after service of notice, which could not defeat the statutory liability created by the notice.

Conclusion: The petitioners remained liable, and the subsequent payment to the dealer did not absolve them from liability under section 48.

Issue (ii): Whether the proceedings under section 48 of the Gujarat Sales Tax Act, 1969 were vitiated for want of proper hearing or breach of natural justice.

Analysis: The material on record showed service of notice on the firm and appearance of a partner before the Sales Tax Officer, where the liability was admitted in writing. In these circumstances, the authority had afforded a proper opportunity to be heard, and no factual basis was established to show denial of natural justice.

Conclusion: The proceedings were not vitiated by breach of natural justice.

Final Conclusion: The recovery action under the garnishee provision was upheld, and the petitions were not entitled to relief.

Ratio Decidendi: A debtor of a dealer who receives notice under the garnishee recovery provision cannot avoid statutory liability by making payment to the dealer after service of notice, and the notice and opportunity of appearance satisfy the requirement of hearing unless actual prejudice or denial is shown.

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