Gujarat High Court Quashes GST Order Based on Non-existent AI-Generated Case Law

The Gujarat High Court has quashed a Goods and Services Tax (GST) order, ruling that a tax officer improperly relied on artificial intelligence-generated case law that did not exist.

The petitioner, Faiz Enterprise, had challenged a show-cause notice, GST cancellation order, revocation rejection, and appellate order. The dispute arose when the officer cited non-existent, wrongly cited, or irrelevant judgments in his decision-making process.

The court noted that the officer, Devang Arvindkumar Yadav, had exclusively used AI-generated case law. He offered an unconditional apology, attributing the error to inexperience and his use of AI for drafting the order and citing judgments. He stated he had attended an AI training program.

The High Court quashed the proceedings and directed the department to issue a fresh notice, considering the petitioner's defense. The Gujarat State Tax Department has since issued instructions for strict compliance regarding AI usage by officers, effective August 18.

This case highlights the critical need for AI accountability in government processes. Similar instances have occurred previously, where courts have overturned decisions due to reliance on inaccurate or fabricated AI-generated legal precedents.