The provide to obtain excise tax stickers for tax authorities faces one other authorized hurdle

Treasury officials have again hit a roadblock to obtain excise labels for liquor and tobacco products sold in the country. This time around, the problem could even halt the production and distribution of spirits and tobacco in Nepal.

While the department wants to select the supplier of the stickers that are stuck on spirits and tobacco products to indicate that their excise duties have been cleared through an international bidding process, domestic suppliers want the department to give them priority in the process.

In the most recent turn of the battle, the Supreme Court last week issued an injunction halting the procurement process in response to a written petition from Manohar Raj Ghimire of Mirage Printing Solution and Sishir Nahata of Sprint Printing and Packaging Company.

In the written petition, they argued that the division had failed to comply with the court’s earlier decision calling for domestic presses to be prioritized. “The Supreme Court stopped the procurement process last week by issuing an injunction,” said Gajendra Thakur, the department’s deputy director general. “We have been instructed to provide clarifications about the procurement process within 15 days.”

The department had published a new call for tenders for eight billion stickers in October. This was the second time in so many years that officials encountered obstacles in executing the tender.

In November last year, the court issued an injunction against the procurement plan after Ghimire filed a written application to the court on the grounds that the tax authorities had discriminated against domestic printers.

The last written application was submitted after the tax authority opened the tenders.

In February of this year, the Supreme Court cleared the way for the tax authorities to continue the tender process, despite the fact that they issued an injunction in November that suspended the proceedings. However, the court had ordered the tax authorities to try to accommodate domestic printing presses by following a “positive discrimination” policy and procuring stickers through a new tendering process.

The court had also instructed the tax authorities to look into the prospect of sourcing the stickers from domestic printing presses.

“On the recommendation of the task force that was set up to comply with the court’s decision, we invited a new global tender,” Thakur said. “The study found that there were no printing presses registered as security presses in the country. International tenders were deemed necessary to ensure the stickers had security features to prevent counterfeiting of stickers in the market.”

He claimed that despite efforts to include domestic printing machines in the process, this was not possible because printing machines were unable to deliver the quality desired.

“We introduced more flexibility in this year’s tender. For example, the printing machine with no experience in printing the banknotes or postal labels can also participate. Even presses with ISO 14298 certification were considered eligible this year, ”added Thakur.

The Supreme Court injunction and another legal battle related to the tax authority’s sticker procurement plan have again created uncertainty about the sticker procurement process.

The department no longer has different types of stickers. Stickers were used that are intended for one type of alcohol or tobacco for another type of alcohol or tobacco products. “Without an excise sticker, the products cannot go on the market. This can affect the production and distribution of liquor and tobacco companies and critical revenue for the government, ”Thakur said. “Having fake stickers will hurt real businesses too.”

Although the Supreme Court last February allowed the tax authorities to pursue their plan to obtain stickers, the company selected to print the stickers did not show up to sign the contract with the department.

Indonesian Perusahaan Umum Percetakan Uang Republic of Indonesia (Perum Peruri) was selected to print and deliver the stickers in March. According to the Public Procurement Act, the tax authority should award the contract to the second lowest bidder who was a Litunian company. However, the department declined, citing technical problems.

The Lithuanian company then moved the Supreme Court, citing Section 27 (6) of the Public Procurement Act, according to which contracts should be awarded to the secondary bidder if the senior bidder refuses to sign the contract. This caused further problems for the department when submitting a new offer. The court later ruled in favor of the tax authorities.

Since the procurement process failed last year, the department authorized the Janak Education Material Center to print nearly 100 million stickers for cigarettes and chewing tobacco products as a stop-gap measure.

“We printed 3 to 3.5 million stickers a day,” said Chitra Acharya, spokeswoman for the Janak Education Material Center. “Since security is ensured by members of the army, the printing work continued.”

According to the center, the sticker will be printed with an acceptable level of security features based on the equipment and materials available. “We cannot guarantee all of the security features that were on stickers printed abroad,” said Acharya.

However, liquor and cigarette manufacturers say they care about the quality of the stickers. “Alcohol and tobacco production has not stopped due to the lack of stickers,” said Ramesh Shrestha, president of the Nepal Beverage and Cigarette Industries Association. “But the tax authorities give us stickers that don’t match our products. We are also concerned that the tax authority’s failure to guarantee quality stickers could lead to the forgery of stickers and hurt real alcohol and tobacco manufacturers. “