In an application filed before the Gujarat High Court to challenge the proceedings by the State Tax Authorities, a Division Bench of Justice A.S. Supehia and Justice Vaibhavi D. Nanavati quashed all orders and directed the authorities to follow the instructions on the use of Artificial Intelligence (AI) issued by the Additional Commissioner of State Tax (Admin), Gujarat, on 18-08-2026.
In a previous hearing on 13-08-2026, the petitioner submitted that, in the impugned order, the State Tax Officer (respondent 1) had relied upon case laws which did not even remotely deal with the issues. It was submitted that the judgment in State of Gujarat v. Aarbee Structures Pvt. Ltd. 2024 (4) TMI 951 was not in existence, whereas certain other cases had different citations and that the ratio would not apply to the present case.
The Court found that the impugned order had been passed by the State Tax Officer by relying exclusively on AI generated case laws. The Assistant Government Pleader was directed by the Court to take appropriate instructions in the matter, failing which, the Court said that it would have to seek presence of the State Tax Officer, who had passed the impugned order.
In the present hearing, an affidavit-in-reply of the State Tax Officer was tendered, and he was also personally present before the Court. Respondent 5, the State Tax Officer who had passed the impugned order, tendered an unconditional apology for citing the judgments by using AI. His affidavit-in-reply also mentioned that he was a probationary officer and that due to lack of experience, this mistake occurred. It was also submitted that after the previous order, he had attended the training programme on “Usage of Artificial Intelligence in Drafting SCA and Adjudication/Appellate Order”.
The Court noted that after the previous order, the Additional Commissioner of State Tax (Admin), Gujarat, had issued instructions dated 18-08-2026 on the use of AI by adjudicating authority and quasi-judicial authority to all Joint Commissioners of State Tax. The Deputy State Tax Commissioner by a communication dated 19-08-2026, also informed the Government Pleader’s Office about the steps taken by his office for use of AI by adjudicating authorities and quasi-judicial authorities.
The Court directed the instructions dated 18-08-2026 to be followed scrupulously and stated that any violation of the same would amount to contempt of the Court. The respondents mentioned that they intended to revise the entire orders which were impugned in the petition by resorting to the provision of Section 108 of the Goods and Services Tax Act, 2017. It was also submitted that a fresh order would be passed and that all the orders may be set aside by the Court.
Considering the respondents’ fair stance, the Court quashed and set aside the show cause notice dated 30-10-2025, the impugned order of cancellation, the order rejecting revocation application, and the appellate order dated 25-05-2026 along with the GST APL-04 dated 26-05-2026. The Court directed the respondent authority to issue fresh notice to the petitioner and the petitioner was directed to fully cooperate with the proceedings. Thus, the petition was disposed of.
