Rs 54.5 crore service tax claim on Cloudtail: What is this case

In this article, we will understand that what was the case of a service tax claim of Rs 54.5 crore on Cloudtail?

What is Cloudtail India?

Cloudtail Amazon.com India is one of the largest sellers in the industry as well as a joint venture between Infosys founder NR Narayana Murthy's Catamaran Ventures as well as Amazon.com India. Cloudtail is owned by Prion Business Services, a holding company, which is owned 76 percent by Catamaran Ventures and 24 percent by Amazon. Before 2019, Amazon.com had a 49 percent exposure in the Prione, yet needed to reduce its exposure to comply with India's FDI standards.

What is the Cloudtail service tax case?

The exact details of its dispute are not yet available, in 2018 Cloudtail had earlier received a show-cause notice from the Directorate General of Goods and Services Tax Intelligence to demand Rs 54.5 crore as service tax along with interest. It is now being treated as contingent liabilities till March 31, 2020. A Cloudtail spokesperson said in a statement that “Cloudtel has disputed the claim of Service Tax by the authorities and the matter is before the Adjudicating Officers. Cloudtail has declared it as a Contingent Liability in its Annual Report from 2019 onwards as per Indian Accounting Standards. As the matter is pending, we are unable to comment 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 is an indirect tax levy, which was subsumed in GST after its implementation in July 2017. Since then, tax authorities have sent several notices to companies and banks related to service tax matters. Earlier this year, just before the end of the financial year 2020-21, several tax notices and summons were sent to taxpayers from indirect tax authorities in Mumbai and some other tax zones across the country.

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