Faiz Enterprise v. State Tax Officer, Unit-67, Surat, R/SCA No. 10123 of 2026 (Gujarat High Court)
·High Court of Gujarat·INOther
The High Court of Gujarat quashed a GST registration-cancellation order after finding that the state tax officer had relied on AI-generated, nonexistent and misattributed case law. After the officer admitted using AI, the court laid down verification instructions for all tax officers and warned that future breaches may attract disciplinary action and amount to contempt of court.
- Court
- High Court of Gujarat
- Date
- 2026-08-20
- Who used the AI
- Other
- AI tool
- Not identified in the record
- Conduct
- A GST registration-cancellation order cited State of Gujarat v. Aarbee Structures 2024 (4) TMI 951, which does not exist, and misattributed Sri Vinayaga Agencies and Jyoti Tar Products. The state tax officer admitted having used an AI tool.
- Outcome
- Other
- Penalty
- No monetary penalty recorded
- Regulatory outcome
- No separate regulatory disposition recorded
- Status
- Verified against listed sources
- Last checked
- 2026-09-05
What was fabricated or misused
- State of Gujarat v. Aarbee Structures Pvt. Ltd., 2024 (4) TMI 951 — not in existence
- M/s. Sri Vinayaga Agencies v. Assistant Commissioner, 2023 (5) TMI 106 — different citation and ratio did not apply
- Jyoti Tar Products Pvt. Ltd. v. Deputy Commissioner, 2024 (7) TMI 512 — did not match any citation and ratio did not apply
What the court said
“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 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.”
“Any case law, statutory provision, rule, circular, notification identified through AI must be independently verified by the Authority using primary official sources before incorporating it in an order.”
“Failure to follow these instructions, including passing orders based on unverified AI content, will amount to misconduct and may attract disciplinary action.”
Timeline
- Show-cause notice issued to the taxpayer.
- GST registration cancellation order passed with nonexistent or irrelevant AI-generated case law.
- Revocation application rejected; the order issued on 2026-03-23.
- Appellate order passed; GST APL-04 issued on 2026-05-26.
- High Court order flagged the cited authorities and required instructions.
- Additional Commissioner issued statewide AI-use instructions for tax authorities.
- High Court quashed the notice and orders and directed fresh proceedings.
Why this case matters
Faiz Enterprise adds a non-lawyer public decision-maker to India's records. Unlike Sammaan Capital v Mantri, where fabricated Supreme Court cases appeared in a judge's order and no AI tool was identified, the state tax officer admitted AI use and the High Court obtained department-wide instructions within five days. It also differs from Pooja Ramesh Singh v JK Bank because the faulty authority sat inside an administrative GST cancellation chain before judicial review. The remedy was operational as well as case-specific: the taxpayer received a fresh notice, and all Gujarat tax adjudicators were told that unverified AI content may be misconduct and contempt.
Practice note
A tax officer using AI for draft orders must locate each cited judgment in an official database, check its citation and legal status, and paste the relevant paragraph before relying on it. The officer should also address the taxpayer's cited cases with reasons. After Faiz Enterprise, ignoring those checks in Gujarat risks misconduct findings and contempt.
Primary sources for this incident
Related regulation records for this incident
No related regulation record has been linked to this incident yet.
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Cite this record
SafeLegalAI Global Legal AI Incident Tracker, “Faiz Enterprise v. State Tax Officer, Unit-67, Surat, R/SCA No. 10123 of 2026 (Gujarat High Court)”, safelegalai.com/tracker/faiz-enterprise-v-state-tax-officer (accessed 2026-10-07). Data: CC BY 4.0.