Source: Taxo.online

A GST Show Cause Notice (Form GST DRC-01A) was challenged on the ground that it had been generated using an Artificial Intelligence tool without independent application of mind by the proper officer. The uploaded notice itself contained AI-generated drafting prompts including “make it lethal”, “add OIO version”, and suggestions to strengthen the order by adding case law, rebuttals, and findings. The petitioner argued that the presence of such prompts demonstrated mechanical reliance on AI rather than an independent statutory adjudicatory process. The State contended these AI references were accidentally uploaded on the GST portal. The central legal question was whether a show cause notice prepared with AI assistance, absent independent application of mind by the officer, satisfies the statutory requirement for lawful adjudicatory proceedings. This matter concerns M/s. SRO India v. State of Punjab and Another dated 07.07.2026 before the Punjab and Haryana High Court.

The Court held that the GST statute requires the competent authority to independently examine the facts and apply its own mind before issuing a show cause notice. It concluded that the use of an Artificial Intelligence tool to prepare and issue such a notice has no statutory sanction. The Court was not persuaded by the Department’s explanation that the AI-generated references were inadvertently uploaded, observing that the notice’s contents indicated reliance on AI-generated drafting. Accordingly, the writ petition was allowed and the impugned Show Cause Notice together with all consequential proceedings was quashed. The department was granted liberty to initiate fresh proceedings in accordance with law after independently examining the facts. The Court identified the absence of independent application of mind as the legal deficiency making the original notice unsustainable.