New Delhi, Jun 14 (IANS): A joint venture between UK Chancellor Rishi Sunaks billionaire in-laws and the internet retailing giant Amazon is in a multimillion-pound dispute with the Indian tax authorities, a Guardian investigation has found.

The disclosure adds to the list of legal battles currently involving the joint venture, following news on Friday that India's competition commission has been given permission to relaunch an investigation into Amazon.

The Guardian reported that small traders claim they are being squeezed out of business by the multinational's selling practices and that the US retailer's 1 billion-pound-a-year venture with the chancellor's father-in-law, the technology entrepreneur NR Narayana Murthy, could be bypassing Indian foreign ownership rules.

Amazon says it is operating in full compliance with local laws.

The emergence of the tax case follows last week's G7 discussions, when the finance ministers of the world's largest economies agreed a global deal designed to make tech companies pay more tax.

In India, foreign companies are banned from running an online retailer that holds inventory and then sells the goods directly to Indian consumers online. So, instead, the Amazon.in website is run as a "marketplace", with Indian retailers selling their products via the site in return for a fee to the US giant, the report said.

One of the largest sellers on Amazon.in is a company called Cloudtail, a business indirectly 76 per cent -- owned by an investment firm controlled by the Murthy family. The remaining quarter of Cloudtail is owned by Amazon.

An analysis of the company's accounts and activities by the Guardian shows that Cloudtail: faces a 5.5 million pound demand -- including "interest and penalties" -- from India's tax authorities

has paid "meagre" taxes over the past four years, while using a business model described as Amazon "on steroids"

has filled its top two posts -- chief executive and finance director -- with Amazon executives, while Cloudtail's holding company, Prione, has also been run by former Amazon managers.

Cloudtail's most recent accounts state: "The company has received a show cause notice in the current year from Directorate General of Goods and Service Tax Intelligence amounting to Rs 5,455 lakh (5.5 million pound) along with interest and penalties for service tax-related matters."

It is not known precisely what the tax dispute is about. The company said it was contesting the bill, and added: "Since this matter is sub judice, we are unable to comment any further."