AI-Generated Case Laws In Tax Order: Gujarat High Court Directs Strict Verification And Human Oversight, Warns Of Contempt
The Gujarat High Court quashed a GST cancellation order as well as appellate proceedings against an entity after noting that the State Tax Officer had passed the order relying exclusively on AI-generated case laws, including non-existent and irrelevant authorities. A division bench of Justice AS Supehia and Justice Vaibhavi D Nanavati had in its earlier ordered said that it appeared that...
The Gujarat High Court quashed a GST cancellation order as well as appellate proceedings against an entity after noting that the State Tax Officer had passed the order relying exclusively on AI-generated case laws, including non-existent and irrelevant authorities.
A division bench of Justice AS Supehia and Justice Vaibhavi D Nanavati had in its earlier ordered said that it appeared that the Officer's order was passed by placing "reliance exclusively on the AI generated case laws". The court had then asked the State to get instructions.
On August 20 the counsel for the State submitted the Affidavit-in-reply of respondent no.1 State Tax Officer, who was personally present before the Court. The counsel also tendered the communication dated 19/08/2026 written by the Deputy State Tax Commissioner and also the administrative instructions issued by the Office of the Additional Commissioner of State Tax dated 18/08/2026.
The officer tendered an unconditional apology for citing the AI-generated judgments and stated in the affidavit-in reply that he is a probationary officer and due to his lack of experience, mistake had happened and he has tendered unconditional apology to the Court for using the Artificial Intelligence (AI) in drafting the order and referring to the nonexistent and irrelevant judgments.
He also submitted that, after the order passed by this Court, he attended a training programme, "usage of Artificial Intelligence (AI) in Drafting SCA and adjudication/appellate order".
The State submitted that respondents intend to revise the entire orders which are impugned in the petition by resorting to the provision of Section 108 of the Goods and Services Tax Act. It said that a fresh order will be passed and if the court think appropriate all the orders may be set aside and the Department will issue fresh show cause notice to the petitioner.
"We appreciate the fair stance taken by the respondents in the present matter and also the issuance of the instructions, in view of the order passed by us. 9. Under the circumstances, in light of the aforenoted facts, we quash and set aside the show cause notice dated 30/10/2025, the impugned order of cancellation dated 15/12/2025, order rejecting revocation application dated 10/03/2026 (issued on 23/03/2026) passed by the respondent no.1 and appellate order dated 25/05/2026 alongwith the GST APL-04 dated 26/05/2026 issued by the respondent no.2; and the respondent authority shall issue fresh notice to the present petitioner," the court said.
The petitioner shall fully co-operate with the proceedings, the court adding that the reply filed by petitioner shall be duly considered by the respondent authority while passing the order, and a reasoned order, in accordance with law shall be passed.
Meanwhile the State also said that Additional Commissioner of State Tax (Admin), Gujarat State, Ahmedabad has issued the instructions dated 18/08/2026 to all the Joint Commissioners of State Tax, Division-1 to 12 governing the use of AI by adjudicating and quasi-judicial authorities which require officers to independently verify every case law, statutory provision, rule, circular or notification identified through AI using primary official sources before incorporating it into an order.
As per the instructions, officers must verify the authenticity and current legal status of judgments, reproduce the original paragraph where an AI tool has paraphrased a ratio, consider judgments cited by taxpayers and ensure human oversight and independent application of mind. AI output may assist an officer's reasoning but cannot substitute the officer's own legal reasoning, the instructions state.
In view of the same the court directed, "We direct that the instructions dated 18/08/2026, which we have incorporated in our order shall be scrupulously followed, and any violation of the instructions would amount to contempt of this Court, in view of the directions issued by us".
The plea was disposed of.
Case title: FAIZ ENTERPRISE THROUGH PROPRIETOR MAHETAR MAHIR FARUKBHAI v/s STATE TAX OFFICER, UNIT-67, SURAT & ANR.
R/SPECIAL CIVIL APPLICATION NO.10123 of 2026