India dismisses ByteDance plea even as company alleges harassment

The Chinese tech giant has gone to court in Mumbai to unfreeze its accounts in India saying tax evasion claims against it are illegal and improper

India dismisses ByteDance plea even as company alleges harassment
TikTok, one of India's most popular video apps before it was banned, has faced scrutiny around the world. Photo: Reuters.

(ATF) Mumbai's High Court has declined a grant relief bid by China's ByteDance, owner of the TikTok video app, after it challenged the local tax authority's decision to block its Indian bank accounts, dealing a blow to its operations.

An Indian tax intelligence agency ordered HSBC and Citibank in Mumbai in mid-March to freeze accounts of ByteDance India as it probed some of the firm's financial dealings. ByteDance, according to the agency, owed the authorities about $11 million.

The tax agency started investigating the company in July. It inspected documents at the company’s office and summoned and questioned at least three executives. Authorities also asked ByteDance to submit documents, including invoices and agreements signed with some clients.

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That "account will be frozen", the two-judge Mumbai bench said dismissing the plea, adding that Bytedance will need to keep that amount blocked in a state-run bank.

The move is being seen as push-back by India as a part of a probe of possible tax evasion amounts after a border clash, last year, between India and China.

Bytedance though insists that the freeze on its bank accounts amounts to harassment and was done illegally, according to Reuters.

In the 209-page court filing lodged on March 25, ByteDance told the High Court in Mumbai the authorities acted against the company without any material evidence and gave no prior notice, as required by Indian law, before such “drastic action”.

Blocking accounts “during the process of investigation amounts (to) applying undue coercion,” ByteDance argued. It is “intended, improperly, to harass the petitioner.”

ACCOUNTS FROZEN

The company has "robust business plans in India and is not contemplating winding up," it said, urging the court to lift the freeze on the accounts.

It also said that since January the company has had to reduce its Indian workforce after India maintained a ban on its popular video app TikTok.

Beijing has repeatedly criticised India over that ban and those of other Chinese apps.

Reports added that none of ByteDance India’s employees have been paid their March salaries due to the account freeze. The company told the court it has a workforce of 1,335, including outsourced personnel.

India’s Directorate General of Goods & Services Tax Intelligence, and the finance ministry which oversees it, did not immediately respond to requests for comments, according to Reuters.

  • With reporting by Reuters.

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