High Court’s Directive on AI Use in Tax Orders
The Gujarat High Court has issued a stern directive to state tax authorities, emphasizing the need to adhere strictly to guidelines when employing Artificial Intelligence (AI) in the drafting of adjudication and appellate orders. This comes in light of the case Faiz Enterprises Vs State Tax Officer, where concerns over AI usage were brought to the forefront.
On August 20, the bench comprising Justice AS Supehia and Justice Vaibhavi D Nanavati underscored the seriousness of the matter by stating that any breach of these guidelines could be considered contempt of court. The directive followed an admission by a State Tax Officer that AI was used in drafting an order, leading to reliance on non-existent and irrelevant judgments.
Case Background and Court Observations
The case originated from a petition filed by Faiz Enterprises, challenging actions initiated by state tax authorities under the Goods and Services Tax (GST) framework. During proceedings on August 13, it was brought to light that the State Tax Officer had cited decisions that were either non-existent or unrelated to the matter at hand. The Court observed that the officer seemed to have relied “exclusively on AI-generated case laws.”
Officer’s Response and Court’s Instructions
When the case was revisited, State Tax Officer Devang Arvindkumar Yadav submitted an affidavit expressing an unconditional apology. He acknowledged his inexperience and admitted using AI for drafting, which resulted in referencing irrelevant judgments. Yadav assured the Court of his participation in a training program on AI usage in drafting and adjudication.
Following the Court’s intervention, the Additional Commissioner of State Tax circulated statewide instructions on August 18 to regulate AI usage by adjudicating and quasi-judicial authorities. These guidelines stipulate that AI can assist decision-makers, but any findings must be verified from primary sources before inclusion in an order. Officers are required to independently verify AI-generated content and ensure it is applicable and lawful.
Emphasis on Independent Legal Reasoning
The guidelines further stress that AI cannot replace the independent judgment of the adjudicating authority. Orders must reflect the officer’s own legal reasoning and application of the law to the case facts. While AI may aid in reasoning, it cannot substitute for human judgment.
The High Court’s decision also recorded these instructions in its order. On the merits of the case, the State agreed to reconsider the orders against Faiz Enterprises and issue a fresh show-cause notice, leading to the setting aside of the previous order and directing a fresh examination.
Advocate Hardik V Vora represented the petitioner, while Assistant Government Pleader Raj Tanna appeared on behalf of the State authorities.
