Appeal Court issues notice on petition challenging tender for alcohol products tax stamps

The Court of Appeal last week took up the petition alleging corruption during the award of a tender to affix tax stamps on alcohol, and issued notice to all respondents of the case, including Finance Minister Basil Rajapaksa, Treasury Secretary Sajith Attygalle, the Commissioner General of Excise and Madras Security Printers in India. 

The Court of Appeal considered the petition filed by Rathubabarundage Lasantha Kumara on 13 October, and issued notice to all respondents in the case.  The petition sought to cancel the said tender alleging gross financial irregularities, adding that the sticker (tax stamp with QR Code) provided by Madras Security Printers was of inferior quality, and does not serve its operational purpose. 

The petitioner stated the sticker in use in its current state could be manufactured by any printer without the need for any specialised security equipment, and accordingly the tender could have been awarded to the State Printer. The petition adds that Madras Security Printers has been blacklisted in several countries, including Sudan, Kenya, and Liberia, for allegations and incidents of malpractice. 

The company had first responded to a tender raised in 2016 by the Excise Department quoting $ 3.19 per 1,000 stickers, with over 384 million stickers produced annually. However, this five-year tender was cancelled just a few months into operation and a fresh tender raised, which again was awarded to the same company at $ 5.99 per 1,000 stickers, the petition states. 

It queried why a fresh tender of the same origin was raised cancelling the existing agreement just months after its operation, and why the same requirement was awarded to the same company at a higher cost? 

Accordingly, the Government has incurred an additional Rs. 1.2 billion in costs over a period of five years, the petition states. 

The tax stamps were affixed on imported liquor bottles from 2017, but they were not extended to domestically produced alcohols. In addition to the questions over quality, the petition states it had emerged the company secretly sold stickers to producers in Kenya to avoid tax payments to the Government.