Informative sample selection in an active learning (AL) setting helps a machine learning system attain optimum performance with minimum labeled samples, thus reducing annotation costs and boosting performance of computer-aided diagnosis systems in the presence of limited labeled data. Another effective technique to enlarge datasets in a small labeled data regime is data augmentation. An intuitive active learning approach thus consists of combining informative sample selection and data augmentation to leverage their respective advantages and improve the performance of AL systems. In this paper, we propose a novel approach called GANDALF (<bold>G</bold>raph-based Tr<bold>AN</bold>sformer and <bold>D</bold>ata <bold>A</bold>ugmentation Active <bold>L</bold>earning <bold>F</bold>ramework) to combine sample selection and data augmentation in a multi-label setting. Conventional sample selection approaches in AL have mostly focused on the single-label setting where a sample has only one disease label. These approaches do not perform optimally when a sample can have multiple disease labels (e.g., in chest X-ray images). We improve upon state-of-the-art multi-label active learning techniques by representing disease labels as graph nodes and use graph attention transformers (GAT) to learn more effective inter-label relationships. We identify the most informative samples by aggregating GAT representations. Subsequently, we generate transformations of these informative samples by sampling from a learned latent space. From these generated samples, we identify informative samples via a novel multi-label informativeness score, which beyond the state of the art, ensures that (i) generated samples are not redundant with respect to the training data and (ii) make important contributions to the training stage. We apply our method to two public chest X-ray datasets, as well as breast, dermatology, retina and kidney tissue microscopy MedMNIST datasets, and report improved results over state-of-the-art multi-label AL techniques in terms of model performance, learning rates, and robustness.