IHC voids licence given to NRTC to track tobacco products.

Byline: Malik Asad

ISLAMABAD -- The Islamabad High Court (IHC) on Wednesday scrapped the multi-million-dollar licence the Federal Board of Revenue (FBR) had awarded to M/s National Radio and Telecommunication Corporation (NRTC) for installing a track and trace system for tobacco products in the country and empowered FBR to initiate the bidding process afresh.

IHC Justice Miangul Hassan Aurangzeb issued the judgement on petitions filed by two companies - M/s National Institutional Facilitation Technologies (Pvt) Limited (NIFT) and M/s Authentix Inc.

The companies criticised the FBR letter dated Oct 29, 2019, of granting the licence to NRTC at a price of Rs731 per 1,000 stamps for five years to establish, maintain and operate the entire process of installing a tracking and tracing system of tobacco products in the country subject to terms and conditions stipulated in the Licencing Rules, 2019, Invitation for Licencing (IFL) and other relevant laws.

On Nov 3, 2004, Pakistan ratified the Framework Convention on Tobacco Control (FCTC) and on June 29, 2018, acceded to the FCTC Protocol to Eliminate Illicit Trade in Tobacco Products.

FBR empowered to initiate fresh bidding process

The Article 8.2 of the FCTC Protocol requires Pakistan to establish a tracking and tracing system to be controlled by Pakistan for all tobacco products manufactured in, imported into, or transiting through its territory.

Pakistan had to embark on the project to meet its national need to monitor and protect its revenues and address the high level of illicit trade of tobacco products within its borders and to meet its international obligations under the FCTC.

The track and trace system was to form part of a regional and international track and trace regime for tobacco products.

In order to prevent the leakage of revenue, under-reporting of production and sale of tobacco products and to ensure proper payment of federal excise duty and sales tax on the manufacture and sale of tobacco products, the FBR was mandated to licence the implementation of the track and trace system, which was required to be developed, operated and maintained by the licencee for tobacco products manufactured in and imported into Pakistan.

On Aug 6, 2019, the FBR published an advertisement inviting applications for the grant of the five-year licence to be issued under the Sales Tax Rules, 2006, for the development, maintenance and operation of a track and trace system in accordance with provisions of...