Bombay High Court to Decide: Should Donuts Be Taxed at 5% or 18% GST? [Read Order]

The Bombay High Court is set to decide whether donuts should be taxed at 5% or 18% under the Goods and Services Tax (GST) regime, a case that could have significant financial implications for bakeries and quick-service restaurant (QSR) chains across India.

The matter has been brought to court by Himesh Foods Pvt Ltd, which operates under Mad Over Donuts and other brands, challenging a demand by the Directorate General of GST Intelligence (DGGI) for Rs. 100 crore in tax dues. The DGGI argued that donuts and similar baked goods should be taxed at 18%, rather than the 5% rate applicable to certain food products.

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The case, Himesh Foods Pvt Ltd vs. Union of India & Ors., was heard on March 3, 2025, before a division bench of Justices B.P. Colabawalla and Firdosh P. Pooniwalla. During the hearing, the petitioner's counsel, Mr. Abhishek Rastogi, pressed for ad-interim relief to restrain the authorities from initiating recovery proceedings based on an adjudication order dated March 4, 2025.

The Union of India’s counsel, Mr. Jitendra Mishra, and other respondents stated that no recovery notice had been issued as of yet, and thus the apprehension of the petitioner was unfounded. The court accepted this statement as an undertaking and did not grant a stay but clarified that the petitioner could approach the court again if a recovery notice is issued.

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The court has now directed the Union of India to file its affidavit-in-reply by March 17, 2025, with the next hearing scheduled for March 24, 2025.

The petitioner argues that donuts should be taxed at 5%, akin to bakery products that do not require further preparation.

The DGGI maintains that donuts should fall under the 18% GST slab, similar to confectionery or desserts served in quick-service outlets.

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This distinction is very important for the industry, as a ruling in favor of 18% GST could increase costs for bakery chains and impact pricing strategies, margins, and consumer affordability.

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The outcome of this case is expected to have a great impact on the bakery and QSR industry. If the higher GST rate is upheld, chains like Mad Over Donuts, Krispy Kreme, Dunkin’ Donuts, and other bakery businesses may have to adjust their pricing or absorb additional tax burdens.

The next hearing set for March 24, 2025, all eyes are on the Bombay High Court as it deliberates on the tax fate of India’s favorite sweet treat—the donut.

To Read the full text of the Order CLICK HERE

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