Mad Over Donuts Faces ₹100 Cr GST Battle: Bakery or Restaurant?

Donuts, GST, and the Big Courtroom Battle

Ever wondered how much tax you really pay for that glazed chocolate donut? Well, in the case of Mad Over Donuts (MOD), the issue has landed in the courtroom—and the implications go far beyond your next dessert order.

The Basics of the Case

MOD's parent company, Himesh Foods Pvt Ltd, recently received a show-cause notice from the Directorate General of GST Intelligence (DGGI), asking them to cough up about ₹100 crore. Why? The government believes that donuts should be taxed at 18% like most bakery items. But MOD doesn’t agree. They say they should be taxed like a restaurant—at just 5%.

So What’s the Real Debate Here?

The argument boils down to whether donuts are sold as part of a restaurant service or as a bakery product. Here’s why it matters:

• Restaurants serve freshly prepared food and are taxed at 5% GST.
• Bakeries, which sell pre-made items, are taxed at 18% GST.

MOD argues that because their staff finishes preparing the donuts at the store before handing them to customers, they’re more like a restaurant. Think toasting, filling, or finishing touches that happen right before serving.

What the Tax Department Thinks

DGGI disagrees. According to them, these donuts are pretty much ready before they reach the outlet. Even if someone adds a topping or warms them up, it doesn’t make the whole operation a restaurant. From their point of view, MOD is a bakery, and the higher tax rate should apply.

The High Court’s Involvement

The Bombay High Court has stepped in to review the issue. For now, the court has told tax officials not to recover any dues from MOD until they hear the full case. The next court date? March 24. Tax officials must file their replies by March 17.

Why Should You Care?

If MOD wins this battle, it could change how taxes are applied to countless food businesses across India. From cafes to bakery chains, the difference between 5% and 18% GST is massive—for business owners and for customers. It might even change how businesses label and serve their food.

The Bigger Picture

At the end of the day, this case isn’t just about donuts. It’s about how modern food businesses are evolving and how our tax laws adapt to that change. As India’s food scene gets more creative, the legal definitions need to keep up.

Until the court decides, next time you grab that donut, know that there’s a whole tax debate going on behind the scenes.