HC quashes GST notice after AI prompts expose lack of independent 'application of mind'
Chandigarh, Jul 21, 2026
The counsel for the petitioner argued that the show-cause notice was prepared with the use of AI and "application of mind on part of the officer is clearly missing"
The Punjab and Haryana High Court has quashed a GST show-cause notice after holding that it had been issued "primarily relying upon the AI Tool". "The use of an AI tool for preparation and issuance of show-cause notice is not shown to be permissible under the statute," the court observed.
The Division Bench of Acting Chief Justice Ashwani Kumar Mishra and Justice Rohit Kapoor observed that the statute required the competent authority to independently examine the facts and apply its mind before issuing such a notice.
The Bench, at the same time, asserted: “Liberty however stands reserved with the competent authority to pass a fresh order in accordance with law, by examining the facts of this case with independent application of mind”.
The writ petition was filed by M/s SRO India challenging show-cause notice dated February 2, 2025, primarily on the ground that "there is no application of mind to the facts involved in the present case by the officer concerned, who has resorted to the use of an Artificial Intelligence (AI) Tool for issuance of the said notice."
The Bench noted that the petitioner's contention was founded upon a document annexed to the show-cause notice and uploaded on the portal. It was also uploaded on the portal referring to the various AI-based aids. Suggestions with regard to the manner in which the order could be passed or improved also found reference.
The counsel for the petitioner argued that the show-cause notice was prepared with the use of AI and "application of mind on part of the officer, as is warranted under the statute, is clearly missing."
It was, on the other hand, submitted on the State’s behalf on the instructions of a State Tax Officer that "the references of AI at the fag end of the show-cause notice have inadvertently been uploaded on the portal." The High Court declined to accept the explanation. "We are not impressed by the explanation offered on behalf of the respondent-department inasmuch as the statute expects the competent authority not only to examine the facts of the case, but also apply his/her mind before issuing a show-cause notice," the Bench observed.
Allowing the petition, the court held: "Since we find that the show-cause notice has been issued primarily relying upon the AI Tool, which does not have the requisite sanction in law, as such the said show cause notice dated February 2, 2025 and the consequential proceedings thereof cannot be sustained in law and are quashed, accordingly."
[The Tribune]
