INCOME TAX5 Sept 2026
Supreme Court sets aside ₹425 crore penalty over fake legal citations, says material appears to be ‘hallucination of AI’ | Mint
Supreme Court has set aside a ₹425.27 crore customs penalty against diamond trader Vijay Ghanshyam Gadiya. The court found the penalty order relied on AI-generated legal material, including non-existent judgments and fake citations. This appears to be an 'hallucination of AI'. The case will now be heard afresh by another customs officer of the same rank. The court also warned against relying on unverified AI-generated case law.
Key Statutory Highlights
- The Supreme Court set aside a ₹425.27 crore customs penalty imposed on diamond trader Vijay Ghanshyam Gadiya.
- The court found the penalty order depended on non-existent judgments, fake citations, and wrong legal propositions — appearing to be AI hallucination.
- The case will be heard afresh by a different customs officer of the same rank, not by the officer who passed the original order.
Actionable Advice for Taxpayers / Founders:Review any customs order against you for unverifiable or suspicious case citations — you may be able to challenge it, but consult a legal professional first.
Statutory Disclaimer: TaxQue Shorts are AI-assisted editorial briefs for compliance awareness. This brief has not passed every source check; confirm the original notification before acting. This does not constitute formal legal or CA counsel.
TaxQue News Desk
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