Can a customs order stand when the two AI-generated judgments it relies on are said to exist in no law report or database? The Bombay High Court has quashed such an order, with the Customs department itself agreeing that the matter should be heard afresh.
Mumbai: The Bombay High Court has quashed, by consent, an Order-in-Original passed by the Commissioner of Customs (Import-I), Mumbai, against a Chennai-based logistics company, which had pointed out that the order cited two Supreme Court judgments it could not trace anywhere and which appeared to it to be the product of artificial intelligence [Quanta Logistics Pvt. Ltd. v. Commissioner of Customs (Import-I) and Another].
A Division Bench of Justices M.S. Karnik and Sandesh D. Patil set aside the Order-in-Original dated August 11, 2026 by an order dated October 30, 2026, authored by Justice Sandesh D. Patil.
What the Bench ordered
The Bench recorded:
“By consent of both the parties, the Order dated 11th August, 2026 is quashed and set aside.”
The company must appear before the Commissioner on November 5, 2026 at 11:00 a.m., after which the Commissioner is to fix the next date of hearing. The fresh proceedings are to be concluded within eight weeks from November 5, 2026. The writ petition was disposed of.
The petitioner’s case: an order passed “by taking recourse to AI”
Quanta Logistics Pvt. Ltd. challenged the order in Writ Petition No. 5093 of 2026. As the Court recorded it, the company’s case was that the order was passed by taking recourse to artificial intelligence, without independent application of mind by the Commissioner.
Senior Advocate Venkatesh Dhond, appearing for the company, pointed to two Supreme Court judgments relied on in the order as an example. According to the petitioner, to the best of its knowledge these judgments do not exist in any law report or database, and they appear to be a hallucination of AI. The company had written to the Commissioner on September 1, 2026 asking for copies of the two judgments, but they were not provided.
The Supreme Court’s “zero tolerance” ruling relied on
The petitioner placed reliance on the Supreme Court’s 2026 decision in Vijay Ghanshyam Gadiya v. Union of India and Another (2026 INSC 947), and the High Court’s order reproduces the paragraphs put before it. Referring to its earlier precedent in Pooja Ramesh Singh v. Jammu and Kashmir Bank Ltd., the Supreme Court had said:
“It is necessary for courts to adopt a zero-tolerance mode for producing, citing or using artificial intelligence-generated precedents without verification. It is a misconduct on the part of an advocate to cite such judgments without verification. Equally, it is a serious lapse if a judge relies on such a fake or hallucinated artificial intelligence-generated material as precedents in support of the determination.”
The same passage declared that such a decision “is no decision in the eyes of the law” and must be set aside “even if an iota of fake or hallucinated material enters the decision-making process”. It added that the ruling has no bearing on the rightful use of AI, only on reliance on fake material presented as precedent.
The petitioner also placed before the High Court the Supreme Court’s note of caution on AI in adjudication:
“However, a note of caution must be sounded: 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.”
The department’s position
Advocate Jitendra B. Mishra, counsel for the Customs department and the Union of India, fairly submitted that the impugned order could be quashed and the matter sent back to the Commissioner for a fresh order.
Why the order matters
The order shows the Supreme Court’s zero-tolerance approach to AI-generated precedents reaching tax and customs adjudication, not only courtrooms. Once the petitioner flagged two untraceable Supreme Court citations and the department could not produce them, the department itself chose not to defend the order. The High Court did not record any finding of its own on how the order was drafted, since the quashing was by consent, but the outcome sends a clear signal to quasi-judicial authorities: every precedent relied on must be verified, and an order resting on unverified citations is unlikely to survive challenge. The merits of the customs dispute remain open for fresh decision.
Case Title: Quanta Logistics Pvt. Ltd. v. Commissioner of Customs (Import-I) and Another
Case No.: Writ Petition No. 5093 of 2026, 2026:BHC-OS:24069-DB
Bench: Justices M.S. Karnik and Sandesh D. Patil, Bombay High Court
Date of Order: October 30, 2026
Appearances: Senior Advocate Venkatesh Dhond with Advocates Bimal Rajasekhar and Sunand Subramaniam for the petitioner; Advocates Jitendra B. Mishra and Sangeeta Yadav for the respondents
