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The Bombay High Court has quashed a customs order after the importer it penalised pointed out that the order cited two purported Supreme Court judgments that could not be traced in legal databases or law reports. Quanta Logistics, the petitioner, argued that the authority had passed the order “by taking recourse to Artificial Intelligence (AI) without independent application of mind” and that the two judgments appeared “to be a hallucination of AI,” according to the order.

The court set aside the August 11, 2026, Order-in-Original by Justices M.S. Karnik and Sandesh D. Patil, with the consent of the customs department on October 30, 2026. Bar and Bench reported the order on November 7.

This is not the first instance of an order by tax and customs officers, tribunals and trial courts that Indian courts have set aside or recalled for relying on non-existent case law. The Supreme Court has said such an order “is no decision in the eyes of the law“, and has asked the Bar Council of India to frame disciplinary norms for lawyers who cite such material.

What happened in the customs case?

  • The order: The Commissioner of Customs (Import-I), Mumbai, passed an Order-in-Original against Quanta Logistics on August 11, 2026.
  • The fake citations: The petitioner’s counsel cited “as an example” two non-existent Supreme Court judgments relied on in the order. Quanta wrote to the commissioner on September 1, 2026, asking for copies, but “the same were not provided”, the order records.
  • The outcome: The department’s counsel “fairly submits that the impugned Order can be quashed and set aside“. The court quashed it “by consent of both the parties” and directed the commissioner to pass a fresh order within eight weeks of November 5, 2026.

What has the Supreme Court said?

Quanta relied on the Supreme Court’s 2026 judgment in Vijay Ghanshyam Gadiya v. Union of India (2026 INSC 947), in which the court set aside a Rs 425 crore customs penalty because the adjudicating officer had relied on fake citations. In Gadiya, the court quoted its July 2 ruling in Pooja Ramesh Singh v. Jammu & Kashmir Bank Ltd.:

“It is necessary for courts to adopt a zero-tolerance mode for producing, citing or using artificial intelligence-generated precedents without verification … We have no hesitation in declaring that such a decision is no decision in the eyes of the law, irrespective of whether such material had a direct or indirect bearing on the decision-making. Such decisions are to be set aside even if an iota of fake or hallucinated material enters the decision-making process, as it would violate the sanctity of adjudication.”

The Gadiya bench added that “assistance can never be substituted for adjudication. AI may well serve as training wheels, but entrusting it with the pilot’s seat would be both imprudent and dangerous.”

Which orders by tax and customs officers have been set aside?

  • Bombay High Court, October 2025: The court quashed an income-tax assessment in KMG Wires Pvt Ltd v. National Faceless Assessment Centre, in which the assessing officer relied on three non-existent decisions for a Rs 22.66 crore addition. “When one is exercising quasi-judicial functions, such results are not to be blindly relied upon,” the court said, as MediaNama reported.
  • Delhi High Court, July 2026: The court set aside a tax order that cited non-existent judgments, MediaNama reported.
  • Gujarat High Court, August 20, 2026: In Faiz Enterprise v. State of Gujarat, the court quashed a GST registration cancellation after the State Tax Officer admitted to using AI to draft the order. “It appears that the impugned order has been passed by the State Tax Officer by placing reliance exclusively on the AI-generated case laws,” the court said.
  • Supreme Court, 2026: In Gadiya, the court set aside the customs penalty and the Gujarat High Court order that had upheld it. It sent the case to a different officer of equal rank and said disciplinary action against the original officer may be considered.

Which orders by courts and tribunals have been set aside?

  • ITAT Bengaluru, December 2024: The Income Tax Appellate Tribunal recalled an order in Buckeye Trust v. PCIT within a week of passing it, after it was found to cite four non-existent judgments, as MediaNama reported.
  • Karnataka, early 2025: The Karnataka High Court directed an inquiry against a Bengaluru trial judge whose order relied on two non-existent Supreme Court decisions that neither side had cited, according to MediaNama’s roundup.
  • Supreme Court, February 27, 2026: Taking up a Vijayawada trial court’s reliance on four non-existent judgments in Gummadi Usha Rani v. Sure Mallikarjuna Rao, the court said, “a decision based on such non-existent and fake alleged judgments is not an error in the decision-making process. It would be a misconduct, and legal consequence shall follow”, MediaNama reported.
  • Supreme Court, July 2, 2026: In the Pooja Ramesh Singh case, the court set aside orders of the National Company Law Tribunal and the National Company Law Appellate Tribunal. Of the six judgments the tribunal relied on, three did not exist, and three were real but carried invented paragraphs or the wrong title, according to MediaNama’s roundup.

What about lawyers who cite fake judgments?

  • Delhi High Court, September 2025: A petitioner withdrew a case in Greenopolis Welfare Association v. Narender Singh after opposing counsel showed it quoted paragraphs 73 and 74 of Raj Narain v. Indira Nehru Gandhi, a judgment with only 27 paragraphs.
  • Bombay High Court, January 2026: The court imposed costs of Rs 50,000 on a litigant whose submissions relied on a judgment that could not be traced.
  • Supreme Court, May 2026: The court asked the Bar Council of India to set up an expert committee, MediaNama reported, and in the Pooja Ramesh Singh case directed it to frame disciplinary norms.

What rules exist?

MediaNama could not find any similar instruction from the Central Board of Indirect Taxes and Customs to customs adjudicating officers.

Also read:

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