Explained: Cloudtail India’s pre-GST service tax case

 







Cloudtail India, one of the biggest vendors on Amazon India marketplace, has disputed a Rs 54.5 crore service tax claim by the Directorate General of Goods and Service Tax Intelligence (DGGI) in response to a showcause notice served by the department pertaining to a pre-GST era case.

What is the service tax case?

While the exact details of the case or its dispute are unavailable, Cloudtail is learnt to have received a showcause notice earlier in 2018 from the Directorate General of Goods and Service Tax Intelligence (DGGI) for Rs 54.5 crore as service tax demand, including interest and penalties. It is now being considered as contingent liabilities as on March 31, 2020. In a statement, a Cloudtail spokesperson said: “Cloudtail has disputed the service tax claim by the authorities and the matter is 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 subjudice we are unable to comment any further. Cloudtail reiterates that it is in full compliance with the laws of India.”

Are tax notices being served to companies for pre-GST cases?

Service tax, an indirect tax levy, got subsumed into GST after its rollout in July 2017. Tax authorities have since then sent several notices to companies and banks pertaining to service tax matters. Earlier this year, just before the financial year 2020-21 came to a close, a series of tax notices and summons were sent out to taxpayers from the indirect tax authorities in Mumbai and some other tax zones across the country.

Cloudtail is one of the biggest sellers on Amazon India marketplace and is a joint-venture between Infosys co-founder NR Narayana Murthy’s Catamaran Ventures and Amazon India. Cloudtail is owned by a holding company Prione Business Services, which is owned 76 per cent by Catamaran Venutures and 24 per cent by Amazon. Prior to 2019, Amazon held 49 per cent stake in Prione, but had to reduce its stake to comply with India’s FDI norms.

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