Statutory charge for sales tax arrears prevails over private assignment, and payment under notice gives valid discharge.

Section 26 of the Tamil Nadu General Sales Tax Act authorises notice to a person holding money due to a dealer, provides that payment in compliance with the notice is a valid discharge, and, read with Section 24, supports a statutory charge for sales tax arrears. The commentary explains that a power of attorney or equitable assignment over a fund does not divest the dealer of ownership of the money so as to defeat statutory recovery of public revenue. On that basis, the sales tax authority's claim prevails over the bank's private arrangement, and the garnishee is discharged by paying the department under the statutory notice.

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Issues: Whether the sales tax authority's statutory demand under the Tamil Nadu General Sales Tax Act had priority over the bank's claim based on a power of attorney and equitable assignment, so that payment made to the department would discharge the garnishee and defeat the bank's claim.

Analysis: Section 26 of the Tamil Nadu General Sales Tax Act, 1959 authorises notice to a person holding money due to the dealer, provides that payment in compliance with the notice is a good discharge, and creates a personal liability if payment is made to the dealer after receipt of notice. Read with Section 24, it creates a statutory charge for arrears of sales tax. The earlier decisions on power coupled with interest and equitable assignment explain that a power of attorney may authorise collection of a specific fund, but they do not decide priority where a statutory charge for public revenue intervenes. The Court held that the debtor continues to own the fund and that the bank's arrangement did not divest the dealer of that interest so as to defeat the statutory recovery under the sales tax law. The Court also applied the principle that a statutory charge for public dues takes precedence over prior private claims.

Conclusion: The sales tax authority had priority over the bank's claim, and payment made by the garnishee to the department pursuant to the statutory notice constituted a valid discharge; the garnishee was not liable again to the bank.

Ratio Decidendi: A statutory charge created for recovery of sales tax arrears prevails over a private claim based on a power of attorney or equitable assignment, and payment made in compliance with the statutory notice gives a valid discharge.

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