The Delhi High Court on Wednesday allowed smartphone maker Vivo India to operate its bank accounts on the conditions that it furnishes a guarantee of Rs 950 crore, Live Law reported.
Last week, the Enforcement Directorate had frozen Vivo’s bank accounts after alleging that the company had transferred Rs 62,476 crore to China to evade tax in India. The Chinese phone maker had challenged the decision, saying that it needs to make monthly payments of around Rs 2,826 crore “towards statutory dues, salaries, rent, monies for daily business operations”.
The Enforcement Directorate has accused Vivo India of transferring almost half of its profits made from sales to China to fraudulently show that the smartphone manufacturer had incurred losses.
At Wednesday’s hearing, senior advocates Siddharth Luthra and Siddharth Aggarwal, appearing for Vivo India, said that the cash flow of the company stopped after the accounts were frozen, Bar and Bench reported.
“This continued supply of oxygen is necessary for me to do my business,” Aggarwal submitted to the court. “...Whatever the balance was, we will maintain but anything that is coming in is necessary to carry out my businesses.”
Vivo’s lawyers also argued that under Section 132 (1) of the Income Tax Act, investigating agencies can only seize undisclosed income and property. The decision to freeze the accounts was thus incorrect and has resulted in “civil death” of the company, the lawyers contended, according to Live Law.
Meanwhile, Advocate Zoheb Hossain, appearing for the Enforcement Directorate, told the court that the proceeds of the alleged crime were to the tune of Rs 1,200 crore while the amount frozen in the bank accounts was only Rs 250 crore.
Justice Yashwant Verma, however, allowed Vivo India to operate its bank accounts. Along with mandating the bank guarantee of Rs 950 crore, he also asked the company to maintain a balance of Rs 250 crore, which was present in the account at the time of freezing.
The judge also gave a week’s time to the Enforcement Directorate to go through the details submitted by Vivo on the payments it needs to make towards employee benefits, taxes and other expenses. The phone maker had submitted the details ahead of Wednesday’s hearing, but the Enforcement Directorate lawyer said that the agency needs more time to analyse the voluminous data.
The matter will be heard next on July 28.
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