Mad Over Donuts gets interim stay from Bombay High Court on ₹57.29 crore GST demand

The Bombay High Court has granted interim protection to Himesh Foods Pvt Ltd, which operates the Mad Over Donuts chain, by staying a ₹57.29 crore goods and services tax (GST) demand and the accompanying penalty raised on the company [Himesh Foods Pvt Ltd v. Union of India & Ors].

A Division Bench of Justices GS Kulkarni and Aarti Sathe noted that on December 2, 2025, a coordinate bench of the High Court had granted interim protection to Hindustan Coca-Cola in a similar dispute.

“By the said order, the co-ordinate Bench admitted the petitions and granted interim relief in the nature of a stay on the impugned show cause notices,” the Court noted.

Relying on this precedent, the Bench granted Himesh Foods/ Mad Over Donuts interim relief.

“There shall be interim relief in the nature of a stay of the impugned order till the final disposal of the petition,” the Court's January 20 order said.

The petition has been directed to be listed for final hearing on February 26, 2026, along with other companion matters raising the same issue.

The dispute centres on whether over-the-counter sale of donuts should be taxed like restaurant services at 5 per cent GST or treated as the sale of regular goods, attracting 18 per cent GST.

Himesh Foods was issued a show-cause notice on August 3, 2024, under Section 74 of the Central GST Act - which deals with the determination of tax not paid due to fraud, wilful misstatement, or suppression of facts to evade tax - and the corresponding State GST provision.

The notice proposed to reclassify its donut sales and raise tax to 18 per cent along with interest and penalty.

A petition was filed in October 2024 challenging this notice.

During the pendency of the writ petition, the authorities passed an adjudication order on January 4, 2025, confirming the demand of ₹57.29 crore and imposing a penalty. This order too was brought under challenge before the High Court.

For Himesh Foods, advocate Abhishek A Rastogi argued that, given the facts of this case, the tax authorities should not have treated each product as a separate goods sale and taxed it at 18 per cent for the period in dispute.

He also pointed out that other similar classification disputes are already being heard by the High Court, and that the government's counsel has not denied this position. The Court proceeded to grant Mad Over Donuts interim relief.

The case is part of a wider dispute triggered by demands of around ₹100 crore raised by the GST intelligence authorities on Mad Over Donuts and other donut and bakery chains, seeking 18 per cent GST on the sale of donuts and bakery items.

In earlier proceedings, the Court recorded a statement that no coercive recovery would be initiated during the pendency of the case and clarified that the petitioner could approach the Court if any recovery notice was issued.

Rastogi has argued that supply of food items is a composite supply of services under the CGST Act, relying on notifications and a government circular stating that restaurant and takeaway supplies are to be taxed at 5 per cent. He has also questioned the issuance of a single centralised show-cause notice covering multiple registrations, contending that separate notices should be issued for each GST registration.

Advocates Abhishek Rastogi, Pooja Rastogi, Meenal Songire, Aarya More appeared for Himesh Foods.

Advocates Jitendra Mishra, Sangeeta Yadav, Ashutosh Mishra, Rupesh Dubey and additional government pleader Amar Mishra appeared for the Director General of GST Intelligence.

Advocates Satyaprakash Sharma and Suman Kumar Das represented the Union of India.

[Read order]