The Bombay High Court has granted interim relief to Himesh Foods, the operator of the Mad Over Donuts chain in India, by staying a GST demand of Rs 57.29 crore along with the associated penalty. The case has drawn attention across the hospitality and food retail sector, as it highlights ongoing uncertainty around GST classification for quick-service and over-the-counter food formats.
The demand was raised by the Directorate General of Goods and Services Tax Intelligence, which issued a show-cause notice stating that over-the-counter sales of donuts should not be classified as restaurant services. According to the tax authorities, such sales attract GST at 18 percent instead of the 5 percent rate that Himesh Foods had been applying.
Himesh Foods challenged the show-cause notice before the Bombay High Court. While the matter was pending, the GST Appellate Authority in 2025 upheld the Rs 57.29 crore tax demand and imposed a penalty on the company. This order was also challenged by the company, leading to the present proceedings.
A division bench comprising Justice GS Kulkarni and Justice Aarti Sathe referred to an earlier order where interim protection had been granted in similar circumstances. The bench observed that parity required similar relief to be extended in this case as well. As a result, the court stayed the operation of the adjudication order and scheduled the matter for final hearing on Feb 26.
Appearing on behalf of Himesh Foods, advocate Abhishek A Rastogi argued that the GST Council has consistently worked towards bringing certainty and rationalisation to tax rates. He highlighted that even in recent GST Council discussions, the issue of restaurant taxation had been taken up with the objective of reducing ambiguity.
The case underscores a broader structural issue around GST interpretation, particularly for hybrid formats that combine dine-in, takeaway, and counter service models. The final outcome is expected to have implications not just for donut chains, but also for cafes, bakeries, and quick-service brands navigating the fine line between restaurant services and retail food sales under the GST framework.
