Gujarat High Court Warns Tax Officers Against Relying on AI-Generated Case Laws
“The Gujarat High Court today directed State tax authorities to strictly comply with instructions regulating use of Artificial Intelligence (AI) while passing adjudication and appellate orders.”
“The Court said that any contravention of the safeguards laid down would amount to contempt of court.”
The Gujarat High Court has made the above observations in a judgment delivered on August 20.
A bench of Justice AS Supehia and Justice Vaibhavi D Nanavati made the observation while directing State tax officers to comply with instructions framed for the use of AI.
The Court issued the directions after receiving an admission from a State Tax Officer that he had used AI while drafting an order. He had consequently referred to judgments which were non-existent as well as irrelevant to the matter.
“We direct that the instructions dated 18/08/20…which we have incorporated in our order shall be scrupulously followed and any violation of the instructions would amount to contempt of this Court, in view of the directions issued by us,” the Court said.
The High Court was hearing a petition filed by a firm Faiz Enterprise challenging certain proceedings initiated by State tax authorities against it under the Goods and Services Tax (GST) regime.
While hearing the matter on August 13, the Court was informed that the State Tax Officer had referred to decisions which were non-existent and in certain others the citations and legal principles copied did not relate to the issue under dispute before him.
The Bench prima facie observed that the State Tax Officer had “solely and exclusively” passed the order by relying on AI generated case laws.
The matter was taken up again today and State Tax Officer Devang Arvindkumar Yadav filed an affidavit tendering unconditional apology.
Explaining his conduct, Yadav said that he was a probationary officer and committed the mistake due to his lack of experience. He admitted that he used AI while drafting the order and referring to judgments which were non-existent or irrelevant.
He also told the Court that after receiving notice from the Court, he had attended a training programme conducted by the authorities on the use of AI in drafting and adjudication.
Following the intervention of the Court, the Additional Commissioner of State Tax had issued Statewide instructions on August 18 for regulating the use of AI by adjudicating and quasi-judicial authorities.
The instructions state that AI is merely a tool to assist the decision-maker. Before relying upon any judgment, statutory provision, rule, circular or notification identified through an AI tool, the primary official source must be independently verified.
If the AI tool paraphrases the ratio of a judgment, tax officers have to search for the original paragraph from where it has been taken from and reproduce it instead of relying on the paraphrased version.
Authorities also have to verify whether judgments and statutory provisions continue to remain good law. Reasons have to be recorded while holding decisions cited by the taxpayers to be inapplicable.
Significantly, the instruction clarifies that AI tool cannot be used to mechanically substitute the independent application of mind by the adjudicating authority.
“Orders must reflect independent legal reasoning and record the officer's own application of mind to the law and the facts of the case. AI output may assist in reasoning but cannot substitute it.” …”instructions state.
The Court said that it was recording the instructions in its order.
On merits, the State told the High Court that it intended to review the orders passed against Faiz Enterprise and issue a fresh show-cause notice. Accordingly, the order was set aside and fresh reconsideration was directed.
Hardik V Vora, Advocate appeared for the petitioner.
Raj Tanna, Assistant Government Pleader appeared for the State.
