The Gujarat High Court has raised serious concerns over a GST adjudication order passed by a State Tax Officer after finding that the officer appeared to have relied exclusively on AI-generated case laws, including authorities that allegedly did not exist or did not support the issue under consideration.

The Bench of Justice A.S. Supehia and Justice Vaibhavi D. Nanavati warned that it could initiate appropriate action against the officer if it ultimately found the petitioner’s submissions to be correct—particularly if the authorities relied upon by the officer were either non-existent or had no application whatsoever to the issue involved.

The petitioner/assessee submitted that the authorities cited in the impugned order did not remotely address the issue involved in the proceedings. According to the submissions recorded by the Court, one of the decisions cited by the officer was State of Gujarat v. Aarbee Structures Pvt. Ltd., 2024 (4) TMI 951.

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The petitioner contended that the said judgment was not in existence. The counsel further pointed out that another decision referred to in the impugned order, M/s. Sri Vinayaga Agencies v. Assistant Commissioner, 2023 (5) TMI 106, had a different citation and that its ratio was not applicable to the issue before the authority.

The petitioner also challenged reliance on a Calcutta High Court decision described as Jyoti Tar Products Pvt. Ltd. v. Deputy Commissioner, 2024 (7) TMI 512, submitting that the citation did not correspond and that the ratio of the decision was also inapplicable to the controversy.

After considering the submissions, the Division Bench made a significant observation regarding the manner in which the State Tax Officer had prepared the impugned order.

The Court recorded that “it appears that the impugned order has been passed by the State Tax Officer by placing reliance exclusively on the AI generated case laws.”

The order therefore raises a fundamental question concerning the use of artificial intelligence in legal decision-making: Can a tax adjudicating authority rely upon AI-generated legal authorities without independently verifying their existence, citation and applicability?

While the Court’s August 13 order does not finally determine the validity of the tax demand or adjudication on merits, its observations place emphasis on the responsibility of the adjudicating authority to ensure that the judicial precedents relied upon in a quasi-judicial order are genuine and legally relevant.

The High Court directed the learned Additional Government Pleader to obtain appropriate instructions regarding the matter.

The Bench made it clear that if the necessary instructions were not forthcoming, the Court could require the personal presence of D.A. Yadav, State Tax Officer, Unit-67, who had passed the impugned order.

This direction indicates that the Court is treating the alleged reliance on incorrect or non-existent precedents as a matter of considerable seriousness, rather than merely as an inadvertent citation error.

The order underscores an important principle for tax administration: an adjudicating authority must apply its own legal judgment and cannot mechanically rely on material generated through technological tools.

The Gujarat High Court’s order therefore carries significance beyond the individual GST dispute, particularly at a time when AI-based legal research and drafting tools are increasingly being used in professional and governmental settings.

The High Court has kept the matter for further consideration on August 20, 2026, at the top of the board. The instructions sought by the Court are to be obtained by the next date of hearing.

At this stage, the High Court has not finally adjudicated upon the underlying tax dispute. The immediate focus is on the circumstances in which the impugned order came to be passed and, in particular, the authenticity and applicability of the judicial authorities relied upon by the State Tax Officer.

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