Bombay High Court stays Rs 57.29 crore GST demand on Mad Over Donuts operator

The Bombay High Court has granted an interim stay on a Rs 57.29 crore goods and services tax demand, along with the associated penalty, raised against Himesh Foods, the company that operates the Mad Over Donuts chain in India.

According to a report by The Economic Times, the Directorate General of Goods and Services Tax Intelligence, in a show-cause notice, held that over-the-counter sales of donuts could not be classified as restaurant services and were therefore liable to 18 per cent GST, instead of the 5 per cent rate being paid by the company.

Himesh Foods challenged the show-cause notice before the High Court. In the interim, the GST Appellate Authority in 2025 upheld the Rs 57.29 crore tax demand and imposed a penalty on the company, which was also challenged by Himesh Foods.

Referring to an earlier order granting interim protection in similar proceedings, a Division Bench comprising Justice GS Kulkarni and Justice Aarti Sathe stated that parity warranted similar relief in the present case. The court accordingly stayed the operation of the adjudication order and listed the matter for final hearing on February 26.

Appearing for the petitioner, advocate Abhishek A Rastogi submitted that the GST Council’s consistent endeavour has been to bring certainty and rationalisation of rates under the indirect tax regime. He further pointed out that even in recent GST Council deliberations, the issue of restaurant taxation had been addressed with the objective of reducing ambiguity.