Several doughnut, bakery chains get ₹50-60 crore GST demand notice
The world of sweet treats has just received a bitter blow, as several major doughnut and bakery chains have been issued GST notices demanding a total of ₹50-60 crore in unpaid taxes. According to a recent report by NDTV Profit, at least six major chains, including Dunkin’ Donuts, Mad Over Donuts, Theobroma, and Krispy Kreme, have each received a notice from the tax authorities.
The notices, which demand 18% Goods and Services Tax (GST) on the sale of their doughnuts and bakery items, argue that such sales do not qualify as restaurant services, which are taxed at a lower rate of 5%. This move has sent shockwaves through the industry, with many wondering how they will absorb the sudden and significant increase in costs.
The notices are reportedly based on the argument that the doughnut and bakery chains are not providing restaurant services, but rather selling packaged goods. This, according to the tax authorities, means that the 18% GST rate applies, rather than the 5% rate applicable to restaurants.
The impact of this move is likely to be significant, particularly for smaller businesses that may struggle to absorb the increased costs. Many of these chains rely on thin profit margins, and the increased tax burden could force them to reconsider their pricing strategies or even consider exiting the market.
The news has also sparked concerns about the potential for further disputes between the tax authorities and businesses. The 18% GST rate is significantly higher than the 5% rate that applies to restaurants, and many businesses are likely to challenge the notices.
The dispute highlights the complexities of the GST regime, which has been criticized for its complexity and the potential for disputes. The tax authorities are under pressure to ensure that businesses are complying with the law, but they must also balance this with the need to provide a stable and predictable environment for businesses to operate.
In response to the notices, the doughnut and bakery chains are likely to argue that their sales are indeed restaurant services, and therefore should be taxed at the lower rate. They may also argue that the tax authorities are misinterpreting the law, and that the notices are therefore invalid.
The dispute is likely to be closely watched by the industry, and could have significant implications for businesses that operate in the sector. The tax authorities will need to carefully consider the arguments put forward by the doughnut and bakery chains, and ensure that their actions are fair and reasonable.
In conclusion, the recent notices issued to several major doughnut and bakery chains are a significant development in the world of GST. The dispute highlights the complexities of the tax regime, and the need for careful consideration and interpretation of the law. As the dispute continues to unfold, it will be interesting to see how the tax authorities and the businesses respond, and what the implications will be for the industry as a whole.
Source:
https://www.ndtvprofit.com/amp/gst/dunkin-mad-over-donuts-theobroma-18-percent-gst-tax-dispute
