The lavish party in Ahmedabad was held to celebrate the second birthday of an Indian Spitz named Abby, and featured an elaborate birthday cake, a performance by a popular folk singer and giant photo cut-outs of the dog.
Police said the event cost 700,000 rupees (nearly £7,000).
Footage of the event on social media showed a crowd dancing maskless in front of a stage, without adhering to local social distancing rules.
“We got information about a big party going on, so we raided the venue,” police inspector V.D. Zala told Agence-France-Presse.
“As per COVID protocol, it is necessary to take permission before organising a party. The organisers are responsible for ensuring social distancing among guests.”
Three men have been arrested for their role in organising the event and have been released on bail.