India's top court voids a ₹425 crore penalty built on fake AI cases

In October 2025, a customs officer in Surat imposed a penalty of about ₹425 crore on a diamond trader for declaring natural diamonds as lab-grown. The Gujarat High Court upheld the order. On September 2, 2026, India's Supreme Court set both decisions aside. Checking the order's sources, the court found cases that did not exist, fake citations, and real cases cited for points they never made. It said the material appeared to be AI hallucinations. The court did not rule on the merits. It sent the case to a different officer of the same rank. It left any action against the original officer to the appointing authority.