ISLAMABAD: The Islamabad High Court (IHC) on Friday dismissed two petitions challenging the bidding process for the Track and Trace System (TTS) introduced by the Federal Board of Revenue (FBR) to comply with the requirements of the International Monetary Fund (IMF) and World Bank to combat tax evasion in four key sectors -- tobacco, cement, fertiliser and sugar.

Justice Miangul Hasan Aurangzeb dismissed the petitions filed by M/s Reliance IT Solutions (Pvt) Ltd (RISP) and National Institutional Facilitation Technologies (NIFT) against their ouster from the bidding process and to challenge the award of contract for the grant of a licence to AJCL (Pvt) Ltd.

However, the learned judge made it clear that the court had not “scrutinised the legality of the entire tender bidding process adopted by the FBR, since this was not the purpose of these proceedings. What I have decided are petitions seeking the issuance of a writ of certiorari with respect to the Grievance Redressal Committee’s decisions rejecting the petitioners’ grievance petitions. Therefore, this judgment shall not insulate the process for the award of the licence for the T&T System from scrutiny by the competent forum.”

Prime Minister Imran Khan inaugurated the TTS for sugar industry on Nov 23, 2021 while tobacco industry had already been under electronic monitoring of the system.

The TTS has been introduced for the development, maintenance and operation of a track and trace for tobacco products, cement, sugar and fertiliser which is one of the major IMF and WB requirements. The World Bank had given a loan to the government for a project called “Pakistan Raises Revenue”. The objective of the project was to contribute to a sustainable increase in domestic revenue by broadening the tax base and combating tax evasion. This objective was sought to be enforced through a TTS aimed at enforcing proper payment of taxes and duties in the tobacco, cement, fertiliser and sugar sectors.

The TTS was intended to prevent leakage of federal tax revenue and underreporting of production and sales of tobacco, cement, sugar and fertiliser products. The FBR awarded TTS contract to AJCL (Pvt) Ltd. Under the plan, the licence period was five years, with the provision for a three-year extension.

However, one of the unsuccessful bidders, RISP challenged the award of the contract before the FBR-constituted GRC that rejected the petitioner’s grievance regarding the tender bidding process for the grant of a licence. NIFT also challenged the award of contract.

On Nov 20, 2020 the FBR published an advertisement inviting applications for the grant of a five-year licence of the TTS for electronic monitoring of the goods manufactured in or imported into Pakistan. According to the requirement, the licencee was supposed to be responsible for end-to-end installation and operation of the system connecting manufacturing sites and import stations to FBR’s central control room.

The TTS was to include the provision of tax stamps and integrated codes to enable real-time electronic monitoring of goods across Pakistan.

The technical bids were opened in December 2020 after which the licensing committee found seven of 11 bidders ineligible. Six of the seven bidders assailed their ouster from the bidding process before the GRC.

The licensing committee declared the AJCL the “most advantageous” bidder, having secured 182.93 out of 200 marks, while the NIFT secured 134.99 and Reliance got 123.85 marks.

Published in Dawn, January 22nd, 2022