Facts of the Case:

In this case, the petitioner challenged an adjudication order primarily based on the ground that the adjudicating authority rejected the petitioner’s defence submissions by relying upon incorrect, non-existent, or irrelevant judicial precedents. The petitioner’s first defence was that the show cause notice dated 29.06.2025 was defective because Relied Upon Documents (RUDs) were not supplied. However, the adjudicating authority rejected this contention by relying on Union of India v. Coastal Container Transporters Association, though the cited judgment related to classification of services and maintainability of writ petitions and had no connection with the issue of non-supply of documents.

Secondly, the petitioner contended that the mandatory pre-notice intimation in Form DRC-01A under the CGST Rules was not issued. The authority rejected this contention relying on NKAS Service (P) Ltd v. Union of India, stated to be a decision of the Madras High Court. However, it was pointed out that no such judgment existed and the actual case was NKAS Services (P.) Ltd. v. State of Jharkhand decided by the Jharkhand High Court, which in fact supported the assessee.

Thirdly, regarding the defence of delayed re-initiation of investigation, the authority relied on CCE v. Flock (India) Pvt. Ltd., which related to classification and refund issues under the Central Excise law and had no relevance to the petitioner’s defence.

Finally, while addressing the plea of violation of principles of natural justice, reliance was placed on Union of India v. W. N. Chadha and CCE v. Rajasthan State Chemical Works. It was demonstrated that the latter judgment was wrongly attributed to the Gujarat High Court though it was a decision of the Supreme Court and related to interpretation of manufacturing processes under excise law.

Based on these inconsistencies, it was argued that the adjudicating authority had relied on AI-generated or incorrectly researched case citations without verifying their correctness or relevance.

Issue:

Whether a quasi-judicial authority can reject defence submissions by relying on incorrect or non-existent judicial precedents. Whether reliance on unverified AI-generated case citations in adjudication orders undermines the validity of quasi-judicial decision-making.

Held that:

The Gujarat High Court observed that the reasoning adopted by the adjudicating authority appeared flawed and deceptive, as the authority relied on judgments that were either incorrectly cited, non-existent, or irrelevant to the issues involved. The Court noted that it appeared that the adjudicating authority relied on AI-generated case citations without actually verifying or reading the judgments. Such conduct was considered inappropriate for a quasi-judicial authority, which is expected to exercise independent application of mind and rely only on authentic legal precedents.

Considering the seriousness of the issue, the Court held that the matter required further examination and that guidelines may be necessary to regulate the manner in which quasi-judicial authorities rely on judicial precedents.

Accordingly, the Court issued notice to the respondents and directed the departmental counsel to assist the Court on this concern. Interim relief was granted to the petitioner, and the matter was listed for further hearing.

Case Name: Singhvi Trandelink LLP & Anr. Versus State of Gujarat & Anr. dated 05.03.2026

To read the complete judgement 2026 Taxo.online 585