The Inland Revenue Department is looking for a domestic solution to its excise duty sticker shortage problem after its effort to procure them through international bidding continues to face roadblocks for a second year.

In the last two years, attempts by the department to procure the stickers have been blocked by various orders from the Supreme Court—one case related to the procurement process remains sub-judice.

“We don’t know when the court will pass its final verdict on the issue. So, we are looking for a domestic solution to address the potential shortage of stickers,” said Arjun Dhakal, information officer at the department.

The department’s efforts to procure the stickers through international bidding in November 2019 faced a setback after a case was filed at the Supreme Court, which eventually cancelled the entire procurement process.

As per the law, the stickers must be pasted on all forms of liquor, beer, and tobacco before they are sold in the market.

The second attempt also hit a snag after the Supreme Court in December last year issued an interim order against the procurement process in response to a writ petition filed by Manohar Raj Ghimire of Mirage Printing Solution and Sishir Nahata of Sprint Printing and Packaging Company claiming that the tax authority was reluctant to prioritise domestic firms, as per the court’s order in the first case.

The department, which has already signed two separate procurement agreements with Janak Education Material Centre to print and deliver 1.44 billion pieces of stickers for tobacco and liquor, is consulting the centre to order another billion pieces of stickers, officials at both the department and centre told the Post.

According to Dhakal, the stickers to be supplied by Janak Education Material Centre under the two procurement agreements, are expected to help meet the demand for at least a year. But, according to the department, it takes more than a year to get delivery of fresh stickers if an international contractor is chosen for the job.

“Given the uncertainty over the Supreme Court verdict, we are consulting representatives of the Janak Education Material Centre to procure another billion pieces of stickers,” said Dhakal. “So far, we haven’t taken a concrete decision on the matter. But, we understand that this option needs to be weighed to ensure the smooth supply of stickers even after a year.”

According to the department, Janak received its first contract for printing and delivering 690 million pieces of stickers meant for tobacco and then another contract to supply 752 million pieces of stickers. The centre has so far delivered 150 million pieces of stickers for tobacco products, the department said.

This is the first time that the tax authority authorised a domestic printing press to print excise duty stickers in more than two decades. The last time it had done so was in the 1990s. It had decided to get the stickers printed abroad to ensure high-security features.

But, Janak has sought a formal procurement agreement for multiple years to print the next batch of stickers arguing that it has to procure new machines to ensure necessary security features.

“As we have to invest millions of rupees to purchase machines required to print excise stickers, we are seeking a guarantee from the tax authority that we will be awarded the printing contract for at least three years so that we recover the investment we make to procure the machine,” said Chitra Acharya, spokesperson for the Janak Education Material Centre. “If not, the government can provide a certain amount under a grant to cover the cost of the new machines.”

In its second attempt to procure excise stickers through international bidding, the tax authority had issued a fresh tender in October last year for eight billion pieces of stickers. But, a writ petition filed against the procurement process and a subsequent interim order from the Supreme Court has made it impossible for officials to procure the stickers from abroad any time soon.

During its previous bid, the court had initially issued an interim order against the procurement plan after Ghimire of Mirage Printing Solutions filed a writ petition arguing that the tax authority discriminated against domestic printing firms. But, the court, in February last year, cleared the path for the tax authority to move ahead with the tender process.

The department failed to procure the stickers even after getting clearance from the court as the company selected for printing and delivering the stickers, Perusahaan Umum Percetakan Uang Republik Indonesia (Perum Peruri), didn’t show up to sign the contract with the department.

The tax authority made a second attempt to procure the stickers through international bidding, but it was wrangled in another legal battle which forced the department to seek help from the Janak Education Material Centre even if that meant compromising on certain security features.

Liquor and cigarette producers say that they are concerned with the quality of the stickers. “We are also concerned that the tax authority’s failure to ensure the supply of quality stickers could lead the to use of counterfeit stickers and this could hurt genuine producers of liquor and tobacco,” Ramesh Shrestha, president of Nepal Beverage and Cigarette Industries Association had told the Post in an interview in December last year.