Rishi Sunak drawn into father-in-law Narayana Murthy Amazon tax dispute: Report

Cloudtail India Pvt Ltd the online retailing joint venture of Infosys cofounder NR Narayana Murthys firm and Amazoncom faced a 55 million pounds demand including interest and penalties from tax authorities after it paid meagre taxes over the past four years a media report said on MondayAmazon reportedly developed independent sellers such as Cloudtail as special merchant which enjoyed over 35 per cent of total sales on the platform until 2019While Murthys Catamaran Ventures indirectly holds 76 per cent in Cloudtail and Amazon the remaining 24 per cent the firms two top posts chief executive and finance director were with the US retailer Cloudtails holding company Prione is also run by a former Amazon manager the report in The Guardian newspaper saidIt said that it is not known precisely what the tax dispute is about and the company said that it was contesting the bill adding that since the matter is sub judice we are unable to comment any furtherFollowing the report the office of UK Chancellor of the Exchequer Rishi Sunak who is soninlaw of Murthy was forced to commentThe revelations come just days after Sunak led the G7 finance ministers charge to agree to a global deal designed to make tech companies pay more taxReaching an international agreement on how large digital companies are taxed has been a priority for the chancellor since he took office said a spokesperson for his UK Treasury officeThe Chancellors consistent position has been that it matters where tax is paid and any agreement must ensure digital businesses pay tax in the UK that reflects their economic activities That is what our taxpayers would expect and is the right thing the spokesperson saidSunak has been dubbed the UKs richest minister largely as a result of his wife Akshata Murtys family wealth The latest Guardian report claims that an analysis of Cloudtails accounts and activities shows that it is one of the largest sellers on Amazonin as part of a 7624 per cent joint venture with AmazonThe company has received a show cause notice in the current year from Directorate General of Goods and Service Tax Intelligence amounting to INR 5455 lakhs along with interest and penalties for service taxrelated matters it quotes Cloudtails most recent accounts as sayingIt claims that the annual report further reveals that Cloudtail which only sells via the Amazon platform paid Amazon fees of 95 million pounds last year almost 10 times more than the Indian business reported in profitAccording to its analysis Murthy created the venture capital firm Catamaran a trustee of the Hober Mallow Trust which ultimately owns the stake in Cloudtail and whose beneficiaries are the Murthy familyThe whole structure raises questions if Cloudtail is really an asset of Amazon and if the Murthys are the name lenders The exact detail of the deal will only be known if the investigation agencies seek details of their shareholder agreements Rashmi Das an author specialising in Indian ecommerce is quoted as saying by the newspaperThe questions around the control of Cloudtail also recently prompted the Confederation of All India Traders CAIT to ask the Indian minister of commerce Piyush Goyal in February to investigate the joint venture to discover why its key personnel have typically joined from AmazonIn a letter to Goyal found on CAITs Twitter account it notes Even though Murthy holds the majority of shares he has allowed the socalled former employees of Amazon on the drivers seat of both Cloudtail and Prione The role of Mr Murthy requires appropriate investigationAmazon maintains that it is operating in full compliance with local laws However last week the Indian competition commission got the goahead to relaunch an investigation into Amazons selling practices in IndiaAfter a court ruling the Competition Commission of India CCI will examine complaints by a traders group that small sellers are being driven out of business because the big US platforms are giving preferential treatment to preferred sellersReached for comments Cloudtail said it has disputed the service tax claim by the authorities and the matter is before the adjudicating authorities The company 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 furtherOn paying meagre taxes over the past four years despite high revenues it said Cloudtail aspires to be a leading online retailer in India The eretail industry is capital intensive and is a highvolume low margin businessCloudtail is an independent company that makes business decisions to protect its interests Cloudtail is governed by a board of directors Catamaran has a majority of the directors and therefore controls the Board The members on the Board from Catamaran are high quality professionals with extensive business experience it saidOn the allegation of the structure of Cloudtail raising questions if it is really an asset of Amazon the firm said Cloudtail has not violated any law of the land and is in full compliance with the law of the land in letter and in spirit Murthy family has put in the required equity capital in Prione parent company of Cloudtail commensurate with its shareholding The allegations are baseless and incorrectA spokesperson for Amazon said Amazon in India has always been fully compliant with all Indian lawsSpecifically our joint venture with Catamaran as well as our marketplace operations are in compliance with Indian foreign direct investment laws and that includes Cloudtail as a sellerAmazon India spokesperson said Cloudtail is one of the 85 lakh sellers selling on the Amazonin marketplace No Amazon employees are working with CloudtailThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter 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