According to the reports on Monday, one of Amazon India’s most popular vendors, Cloudtail is facing a tax demand of almost Rs 56 crore.
Amazon India and Infosys co-founder NR Narayana Murthy’s Catamaran ventures have a joint partnership in Cloudtail. Its tax battle was discovered by the British newspaper in its most recent annual report.
Disputes over tax requests are common among large e-commerce corporations and their vendors. Some tax demands are regularly challenged by e-tailers and online retailers. Cloudtail has opposed the service tax charge, according to an ET representative, and the case is currently before the adjudicating authorities.
“Cloudtail has been disclosing this as a contingent liability in its annual report since 2019 as per Indian accounting standards. Since this matter is sub judice (before the courts), we are unable to comment any further. Cloudtail reiterates that it is in full compliance with the laws of India,” the spokesperson said.
Following revisions in India’s foreign direct investment (FDI) restrictions for e-commerce in 2019, Amazon had to decrease its interest in Prione Business Services, which houses Cloudtail, to 24 percent. Before that49% of the shares in Prione Business Services were under the control of Amazon.
The revenue reported by Cloudtail in 2022 was Rs 11,413 crore having an increase of 28% on the year. Moreover, the net profit crossed up to 130% to Rs 68 crore during the same time.
An advisory warning was issued to the companies back in 2020, by the exercise and taxation department stating, not to relocate their major locations of business or their premises without first updating their GST registration.
Cloudtail was the catalyst for this warning. The government went on to say that it had undertaken a normal physical check at Cloudtail’s business location and discovered it to be empty.