Gurugram: Somewhere in the Goods and Service Tax (GST) department, an officer sat down to draft a show-cause notice against a company called SRO India. He turned to an AI tool for help. What he uploaded to the official portal, though, wasn’t just the notice; it was the AI tool’s suggestions too, menu and all.
One line read: “Just say ‘add OIO version’ or ‘make it lethal’.” Another offered to insert “knowledge and connivance inferred from facts,” tailor-made to defeat the company’s likely defence.
The Punjab and Haryana High Court was not amused. It quashed the February 2025 notice this week.
It wasn’t a permanent bar, though. The bench gave the tax department liberty to pass a fresh order, provided it examined the facts independently this time.
A notice with AI’s fingerprints still on it
The show cause notice, dated 2 February 2025, was challenged by SRO India before a bench of Acting Chief Justice Ashwani Kumar Mishra and Justice Rohit Kapoor.
The company’s lawyers, Muskan Gupta and Vivek Sharma, argued that the document showed no real application of mind, because the officer concerned had leaned on an AI tool to write it, and the proof was sitting right there on the state’s own portal.
The AI’s suggested add-ons were reproduced in the court’s order itself.
“If you want, I can tighten the notice with case-law citations paragraph-wise, convert it into a full Order-in-Original, and draft what it called a ‘defence-proof rebuttal’ against any argument that the buyer wasn’t responsible,” said AI’s suggestion, which also went with the notice.
State’s defence: it was “inadvertent”
Representing the state, Punjab Additional Advocate General Samdisha Kaur, assisted by State Tax Officer Gagan Sharma of the Special Investigation and Preventive Unit, Amritsar, told the court that the AI references had been uploaded to the portal “inadvertently”.
The bench wasn’t buying it.
Acting Chief Justice Mishra held that the law requires a competent authority to do more than skim the facts—it requires actual application of mind before a show cause notice is issued.
Nothing on record showed that using an AI tool to prepare and issue such a notice is even permissible under the statute.
(Edited by: Sugita Katyal)
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