Supreme Court sets aside ₹425-crore customs penalty over AI-generated fake case laws

Who it concerns: Appellant: Vijay Ghanshyam Gadiya; Respondents: Union of India & Anr.; Bench: Justice Dipankar Datta and Justice Sheel Nagu.

What the court decided

• The Court verified and found that the respondent relied on non-existent or fake case laws and AI hallucinations.
• The impugned order of the High Court and the original penalty order are set aside.
• Proceedings against the appellant are revived for a fresh decision by an officer of the same rank, other than the one who passed the original order.
• The civil appeal is allowed.
• The Court left it to the appointing authority to initiate action against the author of the original order as warranted by law.

Also in the document

• The Court declared that decisions relying on fake or hallucinated AI material are 'no decision in the eyes of the law' and must be set aside.
• The Court noted that the Additional Solicitor General did not join issue.
• The Court referenced its draft Regulations for Use of Artificial Intelligence in Courts, 2026, emphasizing that AI is an assistive tool and not a substitute for adjudication.