2026-VIL-96-SC-CU
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CUSTOMS Supreme Court Cases

Customs – Penalty for mis-declaration – Reliance on artificial intelligence generated material – Fake and hallucinated citations – High Court dismissed appellant’s appeal challenging penalty order. Appellant contended that several judgments and articles cited by Additional Commissioner in Order-in-Original were artificial intelligence generated material comprising non-existent case laws with fake citations and hallucinated ratios - Whether reliance on AI generated fake or hallucinated precedents in adjudicatory order vitiates the decision - HELD – The Court's inquiry into cited judgments confirmed that Additional Commissioner relied upon case laws that are either non-existent or have fake citations and some judgments relied upon do not lay down the ratio deduced therefrom amounting to AI hallucination - Supreme Court judgment in Pooja Ramesh Singh v. Jammu and Kashmir Bank Ltd. establishes zero-tolerance doctrine for artificial intelligence generated precedents without verification and declares such decisions are no decision in eyes of law irrespective of whether fake material had direct or indirect bearing on decision-making - Reliance on fake or hallucinated material violates sanctity of adjudication and such decisions must be set aside even if iota of fake material enters decision-making process - AI may serve as assistive tool in decision-making but cannot be substituted for adjudication and entrusting adjudication to AI would be imprudent and dangerous. Use of AI in this case resulting in reliance upon dubious material proves fatal to sustainability of penalty order - The Order-in-Original and High Court orders are set aside and proceedings revived before officer of same rank other than author of original order for fresh decision - Appointing authority directed to initiate appropriate action against officer who passed original order as warranted in circumstances – The civil appeal is allowed
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