Don’t completely freeze bank accounts of Bytedance, says Bombay High Court

The Bombay High Court has directed banks to partially freeze ByteDance’s accounts – to the extent of Rs 79 crore – providing some relief for TikTok’s parent company in a case of alleged tax evasion.

Beyond this blocked amount, the company should be able to operate its bank accounts, the court said on Tuesday.

HSBC and Citibank had frozen ByteDance’s bank accounts after a directive from the indirect tax department.


"We are pleased that the high court agreed with us that our bank accounts in India should be unblocked. This in turn allows us to continue carrying out our operations in India and looking after our employees. We are prepared to take further steps required by the court and are confident in our position on this tax matter,” a ByteDance spokesperson said.

The court allowed ByteDance to ask the tax authorities to transfer the amount blocked to an account in a nationalised bank.

The court said ByteDance could request the tax department to put the amount in a fixed deposit in a nationalised bank so that the company can get the money back with interest if it wins the case and gets the department’s approval.

“It is clear that the banks acted in a bona fide way on the instruction of the tax authorities. The tax authorities will have to provide further instructions so that the amount directed by the court remains frozen,” said Abhishek A Rastogi, a partner at Khaitan & Co., a law firm.

Sources familiar with the matter said ByteDance is now in a position to pay the salaries and reimbursements to its employees as well as payments to its partners. "The company has neither made a commitment to settle with tax authorities nor agreed to deposit money to the tax authorities until the ongoing tax investigation matter is fully resolved," a person familiar with the matter said.


ET reported on Monday that HSBC and Citibank planned to approach the Bombay High Court to say that they had acted in a bona fide way in keeping with the instructions of the tax authorities in the ByteDance tax matter.

India’s tax authorities ordered HSBC and Citibank in Mumbai to freeze the bank accounts of ByteDance India in March, Reuters reported, adding that ByteDance had challenged the move in the Bombay High Court.

The indirect tax department alleged that ByteDance had not paid goods and services tax to the full extent. The company argued it has paid all indirect taxes.

ET first reported that ByteDance has been restructuring the TikTok team in the country after the short-form video app was among Chinese apps banned by India. While most employees in functions such as sales and marketing have left, the technology team has been moved to clusters that handle the Middle East regions and TikTok’s India head Nikhil Gandhi has been appointed head of Middle East, North Africa, Turkey and South Asia.

The restructuring is said to be in line with plans for an initial public offering for TikTok Global in October, which would enable the retained staffers to redeem their stock options.