The employer does not have to grant you the permission to offset your notice with accumulated annual leave. If they don't, however, they must pay you the cash value of said leave at the end of your notice. Notice periods are given for a reason and that is a proper handover of your duties, etc. If you go on leave you are not performing your handover so the employer has every right to disallow it.
However, if you WANT to leave early, it's still possible but expensive. You can give the employer salary-in-lieu of notice. So if you have to give a month's notice, you would have to pay your employer the equivalent of one month's salary. (You wouldn't get any salary for that leave period either). Your annual leave could be used to offset the amount you would have to pay them but there is another legal problem (I hear you saying "what's the difference?"
If you pay the company salary-in-lieu, then legally you can go and work for another company. If you go on leave, you are still employed and cannot go to work for another company until the end of your leave/contract. If you just stop coming to the office you will be in violation of your contract and may be subject to other remedies allowable by law depending on the contents of your contract.
If you screw with your employer here, you could find yourself being blackballed if you are here on a employment visa. At any rate, you would be letting you new employer know in advance that you cannot be trusted to hold up your end of a contract. Think twice about it.
