The Bombay High Court granted interim relief to Himesh Foods Pvt Ltd, staying a Rs 57.29 crore GST demand and penalties. The Division Bench noted a coordinate bench had earlier extended similar protection to Hindustan Coca-Cola in a comparable GST dispute.
MUMBAI: The Bombay High Court has provided interim protection to Himesh Foods Pvt Ltd, which manages the Mad Over Donuts chain, by staying a Rs 57.29 crore goods and services tax (GST) demand and associated penalties imposed on the company.
A Division Bench consisting of Justices GS Kulkarni and Aarti Sathe noted that on December 2, 2025, a coordinate bench of the High Court had similarly granted interim protection to Hindustan Coca-Cola in a related dispute.
The Court observed,
“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,”
Citing this precedent, the Bench provided Himesh Foods/Mad Over Donuts with interim relief.
The Court’s order dated January 20 stated,
“There shall be interim relief in the nature of a stay of the impugned order till the final disposal of the petition,”
The dispute revolves around whether the over-the-counter sale of donuts should be taxed at the restaurant service rate of 5 percent GST or classified as regular goods, which would subject them to an 18 percent GST.
Himesh Foods received a show cause notice on August 3, 2024, under Section 74 of the Central GST Act, which pertains to the determination of tax not paid due to fraud, willful misrepresentation, or suppression of facts to evade tax, along with the relevant State GST provisions.
This notice proposed a reclassification of its donut sales, increasing the tax rate to 18 percent, alongside interest and penalties.
A petition challenging this notice was filed in October 2024. While the writ petition was pending, the authorities issued an adjudication order on January 4, 2025, confirming the demand of Rs 57.29 crore and levying a penalty, which was also contested before the High Court.
For Himesh Foods, advocate Abhishek A. Rastogi argued that the tax authorities should not have classified each product as a standalone sale and taxed it at 18 percent during the disputed period.
He also noted that similar classification disputes were simultaneously being addressed by the High Court and that the government’s counsel did not dispute this point. The Court subsequently granted interim relief to Mad Over Donuts.
Rastogi argued that the supply of food items constitutes a composite supply of services under the CGST Act, citing notifications and a government circular indicating that restaurant and takeaway supplies are to be taxed at 5 percent. He also raised concerns about the issuance of a centralized show-cause notice that covered multiple registrations, asserting that separate notices should have been issued for each GST registration.
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This case is part of a broader dispute initiated by demands of nearly Rs 100 crore made by GST intelligence authorities on Mad Over Donuts and other donut and bakery chains, seeking 18 percent GST on donut and bakery item sales.
In earlier proceedings, the Court recorded a statement that no coercive recovery actions would be taken while the case was pending, clarifying that the petitioner could return to the Court if any recovery notice was issued.
Advocates Abhishek Rastogi, Pooja Rastogi, Meenal Songire, and Aarya More represented Himesh Foods. Advocates Jitendra Mishra, Sangeeta Yadav, Ashutosh Mishra, Rupesh Dubey, and additional government pleader Amar Mishra represented the Director General of GST Intelligence, while advocates Satyaprakash Sharma and Suman Kumar Das represented the Union of India.
The petition has been scheduled for final hearing on February 26, 2026, alongside other related matters addressing the same issue.
Case Title: Himesh Foods Pvt Ltd v. Union of India & Ors
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