NEW DELHI: In a major setback for TikTok developer ByteDance's India operations, the Bombay high court has dismissed its plea to unblock its bank accounts frozen by Indian authorities in an alleged case of tax evasion.

The bench of justices SP Deshmukh and Abhay Ahuja, however, granted Bytedance the leeway to operate its bank accounts in HSBC and Citibank after depositing the dues allegedly owed by the company to the Goods and Services Tax (GST) authorities.

The court has directed Bytedance to deposit around $11 million that tax authorities believe the tech company owes. The company would need to keep that amount blocked in a state-run bank and cannot use it for any other purpose.

ByteDance has submitted that it does not owe the tax demanded by the Indian government and does not agree with the tax authority's decision to freeze its accounts. It further appealed that it needed access to the bank account in order to disburse salaries to its employees in India.

Counsel for the Union government opposed the plea, stating that no interference was warranted from the court at this stage. Following the ban on its top moneymaker, TikTok, in India, tax authorities were apprehensive that due to failing business, Bytedance will "run away". Hence, the freezing of the firm's bank accounts was undertaken to safeguard the interests of the tax authorities.

In mid-March, GST authorities had ordered HSBC Bank and Citibank in Mumbai to freeze accounts of ByteDance India as it probed some of the firm's financial dealings. The Chinese software developer challenged the move in court, saying the freeze amounts to harassment and was done illegally.