The GST Commisionerate in Hyderabad yesterday froze two bank accounts of Tollywood superstar Mahesh Babu held in ICICI and Axis banks alleging that he owed them 73.5 lakhs which includes penalty for default payment of 18.5 lakhs. GST authorities claimed that the dues were for the fiscal year 2007-08 "For services, which the actor rendered, like appearance money, advertising, promoting products and brand ambassador among others, which are taxable, were not paid."

Mahesh Babu's legal team have accused the GST Commissionerate of illegally freezing the accounts and have released the following statement "

"The GST Commissionerate Hyderabad has attached the bank accounts for a disputed tax demand of Rs 18.5 lakhs claiming Rs 73.5 lakhs towards Tax interest and penalty for brand ambassador services rendered in FY 2007-08 which was not taxable service,"The brand ambassador services was brought in the statute by insertion of section 65(105)(zzzzq) with effect from 1-7-2010. The GST Commissionerate Hyderabad has carried out the attachment without notice when several judicial pronouncements on this issue is in favour of the taxpayer and more so when the dispute is pending before the High Court,"

The Legal team has asserted that "Mr Mahesh Babu is a law abiding citizen complying with all fiscal legislation and has no undisputed tax payable".