Bombay High Court Stays ₹57.29 Crore GST Demand on Mad Over Donuts Operator

The Bombay High Court has granted interim relief to Mad Over Donuts operator Himesh Foods by staying a ₹57.29 crore GST demand raised by tax authorities. The dispute centres on whether the sale of donuts qualifies as a restaurant service or a taxable supply at a higher GST rate.

The court has paused the enforcement of the tax demand and penalty, offering temporary protection to the company until the matter is finally heard.

Why the GST Demand Was Raised

The Directorate General of Goods and Services Tax Intelligence (Directorate General of GST Intelligence) issued a show-cause notice alleging that over-the-counter donut sales by Himesh Foods do not fall under restaurant services.

GST Rate Dispute Explained

• GST paid by company: 5% (restaurant service category, without input tax credit)
• GST demanded by authorities: 18% (as supply of goods)
• Total demand raised: ₹57.29 crore, including penalty

Tax officials argued that the absence of table service and the nature of takeaway sales meant the lower restaurant GST rate was not applicable.

Company Challenges Tax Authority’s View

Himesh Foods contested the show-cause notice before the high court, maintaining that its outlets meet the criteria of restaurant services under GST law. However, in 2025, the GST Appellate Authority upheld the tax demand, prompting the company to challenge the order once again.

The petitioners argued that inconsistent interpretation of restaurant taxation defeats the objective of a uniform GST framework.

Bombay High Court’s Interim Relief

A division bench comprising Justice GS Kulkarni and Justice Aarti Sathe noted that similar cases had already received interim protection from the court. Citing the principle of parity, the bench stayed the adjudication order and the associated penalty.

Next Hearing

Final hearing date: February 26, 2026

Relief granted: Interim stay on GST demand and penalty

GST Council’s Role in Restaurant Taxation

Senior counsel for Himesh Foods highlighted that the GST Council has repeatedly attempted to simplify and rationalise GST rates for the food and restaurant sector.

Recent GST Council discussions have focused on reducing ambiguity in restaurant taxation, especially for quick-service restaurants, bakery chains, and takeaway-focused brands.

Why This Case Matters for the Food Industry

• This ruling is closely watched by:
• Quick-service restaurant (QSR) chains
• Bakery and dessert brands

Café and takeaway-focused food businesses

A final verdict could significantly influence how GST is applied across India’s fast-growing organised food retail sector.

What Lies Ahead

The interim stay provides immediate relief to Mad Over Donuts’ operator, but the final outcome will depend on how courts interpret restaurant service definitions under GST law. With increasing scrutiny on food businesses, the case may set an important precedent for tax classification in India’s QSR industry.

Frequently Asked Questions (FAQs)

1. Why was Mad Over Donuts issued a GST demand?

Authorities claimed that over-the-counter donut sales should attract 18% GST instead of the 5% restaurant rate.

2. How much GST demand was raised on Himesh Foods?

The total demand, including penalties, amounts to ₹57.29 crore.

3. What relief did the Bombay High Court provide?

The court granted an interim stay on the GST demand and penalty until the final hearing.

4. Does this ruling cancel the GST demand permanently?

No. The stay is temporary. The final decision will be taken after detailed hearings.

5. Why is this case important for other food brands?

It could set a precedent on how GST applies to takeaway, bakery, and QSR-style food businesses across India.