Amazon India’s Largest Seller Cloudtail’s Supplies Hit After GST Registration Suspension

Cloudtail India, the largest seller on Amazon India platform suffered a major supply disruption after its goods and service tax (GST) registration was suspended in Haryana.

Cloudtail India is a joint venture of Amazon Asia Pacific Holdings and Infosys founder Narayana Murthy’s personal investment vehicle Catamaran Ventures. Amazon Asia controls less than 25% of the company.  

However, the 20 hours wait till their GST registration was reinstated led to chaos as vendors were unable to generate e-way bills to send their supplies to Cloudtail warehouses in Haryana. Cloudtail operates fulfillment centers in Gurgaon, Jamalpur, Mewat, and Sonipat in the state.

A delay in generating e-way bills, meant Cloudtail could not give appointments for deliveries, which would lead to a 24 to 48-hour delay for inbound shipments.

“We would like to reiterate that Cloudtail’s Haryana GST registration is current and valid. We continue to operate in adherence to all applicable GST requirements,” a Cloudtail spokesperson told ET. However, no specific reason was given why its GST registration was suspended.  

According to a tax official, who spoke to the publication, the suspension could have been due to either an outstanding demand that was not complied by the company, or an additional input tax credit availed which was not meant to be taken.

As per law GST registration can be canceled:

• If a company has not filed returns for six months
• For taking extra input tax credit on the back of fake invoices or bills 
• Taking wrongful tax exemption
• Not having started business operations after six months of taking GST registration

Cloudtail had reported a 25% jump in revenues for 2018-19 at INR 8,945 Cr along with a profit of INR 29.4 Cr, according to regulatory filings.

In February 2019, Catamaran Ventures had increased its stake in Cloudtail’s parent company to 76% from 51% earlier. This reduced JV partner Amazon Asia’s stake to 24% from 49% after the implementation of Press Note 2. Cloudtail thus was not an Amazon group company anymore and became eligible to sell on the marketplace.

 In September 2020, the Competition Commission of India (CCI) had dismissed a case of abuse of dominance filed against Amazon Seller Service. The case was filed by a Dutch brand Beverly Hills Polo Club (BHPC).

BHPC had claimed that Amazon Sellers Service was creating unfair market conditions and barriers for market entry in India through its dominance on the online fashion retail space and its affiliates — Amazon Export Sales and Cloudtail India.

The brand also alleged that Amazon provided deep discounts on products sold through Amazon and Cloudtail while giving them higher search rankings and ensuring better customer reviews. This has also affected the competition within the suppliers’ market.