Garuda won't use anything on obey unless you tell it to use it. All it will do is autoattack. So if you want knockback, tell it to use it.
If you or your pet die and when you need to re-summon, make sure to use obey again. Cause it doesn't automatically, at least I have noticed it on mine. Would be nice if we can macro pet skill, that way I can macro: /pet "Obey", /ac "Bio II", /pet "Wind Blade" and then when I hit Bio on my rotation I could just say /ac "Bio", /pet "Contagion". Would have made a lot simpler for ps3 player, instead of having to toggle different control sets.