Court invalidates garnishee notice for sales tax, relieves petitioner of liability, directs re-examination.

The court set aside the impugned garnishee notice dated September 14, 2007, as it was issued without any assessment order against the Forest Department, rendering it invalid under Section 17 of the APGST Act. The petitioner was relieved of the liability to pay sales tax on bamboo supplied by the Forest Department, citing relevant legal precedents. The court directed the third respondent to re-examine the matter in line with the court's orders. The writ petition was disposed of, and pending miscellaneous petitions were dismissed without costs.

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Issues Involved:
1. Legality of the garnishee notice dated September 14, 2007.
2. Liability of the petitioner to pay sales tax on bamboo supplied by the Forest Department.
3. Validity of the assessment orders and demand notices issued by the Commercial Tax Department.
4. Applicability of the Supreme Court and High Court judgments to the case.
5. Procedural requirements for issuing a garnishee notice under Section 17 of the APGST Act.

Issue-wise Detailed Analysis:

1. Legality of the Garnishee Notice Dated September 14, 2007:
The petitioner sought to quash the garnishee notice requiring them to pay Rs. 1,41,54,373 as sales tax for bamboo supplied by the Forest Department from 1991-92 to 2004-05. The petitioner argued that the Commercial Tax Department had forcibly collected taxes from them under Section 6A of the Act and that both the buyer and the seller cannot be taxed on the same transaction per proviso (i) to Section 5 of the Act. The impugned garnishee notice was issued without any assessment order, which is a prerequisite under Section 17 of the APGST Act. The court noted that the impugned notice did not refer to any assessment orders against the Forest Department, and the Commercial Tax Department did not file a counter-affidavit.

2. Liability of the Petitioner to Pay Sales Tax on Bamboo Supplied by the Forest Department:
The petitioner contended that the demand for sales tax was illegal, citing the Supreme Court's decision in State of Orissa v. Titaghur Paper Mills Co. Ltd. [1985] 60 STC 213 (SC), which held that no taxes are payable in respect of transactions between the Forest Department and the petitioner. The court observed that the petitioner cannot be subjected to tax under Section 6A of the APGST Act for the bamboo cuts supplied during the five assessment years from 1994-95 to 1998-99, as per the STAT's order dated January 29, 2007.

3. Validity of the Assessment Orders and Demand Notices Issued by the Commercial Tax Department:
The petitioner argued that no assessment orders were passed against the Forest Department for the years in question, and the demand notices issued by the Forest Department were due to pressure from the Commercial Tax Department. The court noted that the impugned notice did not indicate any assessment orders against the Forest Department and that the Commercial Tax Department had not initiated assessment proceedings against the Forest Department.

4. Applicability of the Supreme Court and High Court Judgments to the Case:
The petitioner cited several judgments, including Titaghur Paper Mills Co. Ltd. [1985] 60 STC 213 (SC), Bhadrachalam Paperboards Ltd. v. Government of Andhra Pradesh [1998] 111 STC 657 (SC), and Andhra Pradesh Paper Mills Limited v. Government of Andhra Pradesh [1989] 73 STC 26 (AP), to argue that no tax can be demanded without an assessment order followed by a demand notice. The court agreed that the impugned garnishee notice fell foul of these decisions, as no prior assessment order existed.

5. Procedural Requirements for Issuing a Garnishee Notice Under Section 17 of the APGST Act:
The court examined Section 17 of the APGST Act, which allows the assessing authority to require any person from whom money is due to the dealer to pay the amount towards arrears of tax. However, this can only be done if an assessment order exists. The court found that no assessment orders were passed against the Forest Department, making the garnishee notice invalid. The court set aside the impugned notice and directed the third respondent to re-examine the matter in light of the court's orders in TREVC No. 13 of 2007 and batch.

Conclusion:
The writ petition was disposed of, and the impugned garnishee notice dated September 14, 2007, was set aside. The court clarified that if the Forest Department demands payment of sales tax on the bamboo cuts supplied, the petitioner could challenge such orders in appropriate legal proceedings. The miscellaneous petitions pending were dismissed without costs.

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