Faiz Enterprise vs State Tax Officer, Unit-67, Surat

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2026 Supreme(Online)(Guj) 22962

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
A.S. Supehia, Vaibhavi D. Nanavati, JJ
Faiz Enterprise – Appellant
Versus
State Tax Officer, Unit-67, Surat – Respondent
R/SPECIAL CIVIL APPLICATION NO.10123 of 2026 | C/SCA/10123/2026

Important Points

Adjudicating authorities cannot rely on AI-generated case laws without independent verification; AI must serve as an assistive tool and not a substitute for human legal reasoning and oversight to maintain the legal sustainability of judicial orders.

Subject

Tax Law - GST / Administrative Law

Act Referred

Goods and Services Tax Act, 2017: S.108

Headnote

(A) Artificial Intelligence in Adjudication - Reliance on AI-generated case laws - Use of non-existent or irrelevant citations generated by AI tools in a quasi-judicial order is impermissible and renders the order legally unsustainable. (Para 1, 2, 3)

(B) Administrative Oversight - Guidelines for AI usage - AI tools must only assist adjudicating authorities; all statutory provisions, rules, and case laws identified via AI must be independently verified through primary official sources to ensure accuracy and transparency. (Para 4)

(C) Judicial Reasoning - Human Oversight - AI output cannot substitute independent legal reasoning; the ultimate responsibility for the correctness of an order lies with the issuing authority, and failure to verify AI content may amount to misconduct. (Para 4)

Issues: Whether an adjudication order passed by relying exclusively on AI-generated, non-existent case laws is sustainable and what guidelines should govern the use of AI by quasi-judicial authorities.

Advocates:
For the Appellants/Petitioners: Hardik V Vora
For the Respondents: Raj Tanna

Table of Content
1. reliance on non-existent ai-generated case laws in judicial orders is unacceptable. (Para 1 , 2 , 3)
2. ai must be used as an assistive tool with mandatory human verification and oversight. (Para 4 , 5 , 6)
3. orders based on ai hallucinations are quashed, allowing for fresh adjudication. (Para 7 , 8 , 9 , 10)

ORAL JUDGMENT

(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)

1. On 13/08/2026, this Court passed the following order:

“1. Learned advocate Mr.Vora at the outset, while pointing out the impugned order, has submitted that the State Tax Officer Unit-67 has relied upon the case laws, which do not even remotely deal with the issue raised before him. He has submitted that the judgement in the case of State of Gujarat v. Aarbee Structures Pvt. Ltd. , 2024 (4) TMI 951 is not in existence, whereas the decision of the Madras High Court referred therein in the case of M/s. Sri Vinayaga Agencies v. Assistant Commissioner , 2023 (5) TMI 106 has different citation and ratio will not apply to the present case. Finally, the decision of the Calcutta High Court in the case of Jyoti Tar Products Pvt. Ltd. v. Deputy Commissioner , 2024 (7) TMI 512 also does not match with any of the citations and ratio also does not apply.

2. It appears that the impugned order has been passed by the State Tax Officer by placing reliance exclusively on the AI generated case laws.

3. Learned AGP shall take appropriate instructions in the matter, failing which the Court will be constrained to seek presence of the State Tax Officer Unit-67 namely, Mr.D.A.Yadav who has passed the impugned order. This Court shall also initiate appropriate action against him, in case it finds that the submissions advanced by learned advocate Mr.Vora regarding the case laws upon which reliance has been placed by the State Tax Officer are correct, that such case laws are either not in existence or do not even remotely apply to the issue. Such instructions shall be taken by the next date of hearing.

4. The matter is kept on 20.08.2026 at the top of the board.”

2. Today, when the matter is taken up for hearing, learned Assistant Government Pleader Mr.Raj Tanna has tendered the Affidavit-in-reply of respondent no.1 herein, who is personally present before this Court. The other officers, viz. (I) Mr.Brijesh Upadhyay, Deputy Commissioner of State Tax (Court Branch), Rajyakar Bhavan, Ahmedabad, (ii) Mr.Ashok Karangiya, Deputy Commissioner of State Tax, Range-17, Surat and (iii) Mr. S.R. Rathod, Assistant Commissioner of State Tax, Unit-67, Surat are also present before this Court. He has 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. All the documents tendered before us, are ordered to be taken on record.

3. The Affidavit-in-reply filed by the respondent no.5 Shri Devang Arvindkumar Yadav, State Tax Officer, who has passed the impugned order, which has been referred by us, in our order dated 13/08/2026, has tendered an unconditional apology for citing the judgments in the impugned order, which are, in fact, cited by using the Artificial Intelligence (AI). The affidavit-in- reply (tendering unconditional apology), specifically refers that the deponent is a probationary officer and due to his lack of experience, the mistake has happened and he has tendered unconditional apology to this Court for using the Artificial Intelligence (AI) in drafting the order and referring to the non- existent and irrelevant judgments. He has also submitted that, after the order passed by this Court, he has attended the training programme on the subject, "usage of Artificial Intelligence (AI) in Drafting SCA and adjudication/appellate order", which was conducted on 18/08/2026.

4. Pursuant to our order, the Additional Commissioner of State Tax (Admin), Gujarat State, Ahmedabad has issued the instructi