The Bombay High Court on Tuesday said China’s ByteDance must deposit INR 78.91 Crore (approx. $11 million) that authorities believe the company owes in an alleged case of tax evasion, a decision the government said bars the firm from using existing bank funds for other purposes, as reported by Reuters.

In mid-March, in an alleged evasion of certain taxes in online advertising dealings between the ByteDance unit in India and its parent entity in Singapore, TikTok Pte Ltd., two of ByteDance India’s bank accounts in Citibank and HSBC in Mumbai had been frozen by Indian tax authorities. ByteDance challenged the move in court stating the action was illegally undertaken amounting to harassment.

ByteDance, the owner of the TikTok video app, has said in court it does not owe the tax government is demanding and was not in agreement with the tax authority’s decision to freeze its accounts.

Learned senior advocate Mr Rafiq Dada appearing along with Mr Vikram Nankani, learned senior advocate, appearing for Bytedance (India) Technology Pvt. Ltd., submitted that the company has a staff of about 800-1000 employees, and having regard to that dire consequences being faced by the company, it should be allowed to operate bank accounts to bear necessary expenses over salary.

The counsel for the banks, in view of the particular situation, noted that the company may be able to operate the bank account, for the amounts over and above the amount of revenue of INR 78.91 crore. 

The Bombay High Court in its order while referring to the fixed deposit of INR 78.91 Cr has stated that "It may be in the interest of all to have the same in a nationalized bank." 

However, counsel for the federal tax authority, Jitendra Mishra, told Reuters, effectively the accounts remain frozen until the amount is moved to a state-run bank.

ByteDance in a statement said the court had agreed with the company that its accounts “should be unblocked” and that will allow it to continue operations. The company also said it was prepared to take further steps required by the court and was confident in its position on the tax matter.

The company has not commented on government counsel Mishra’s statement and it is unclear how the company will deposit the amount ordered by the court while also funding operations.