The temple, said to have been built in the 3rd century BC, faces a new unrest with its first Nepali chief priest crossing swords with the new government.
Bishnu Dahal had made history in January when Nepal's first Maoist government had appointed him as the chief priest at the Pashupatinath temple after the reigning Indian priest, Mahabaleshwor Bhatt, was forced to resign due to political pressure.
It was a radical departure from the prevailing tradition of employing only Indian priests from the orthodox south Indian states of Kerala, Karnataka, Andhra Pradesh and Tamil Nadu.
However, the Nepali priest's appointment was short-lived as the Maoist move triggered widespread protests in which both India and Nepal's leading political parties also joined in.
The centuries-old temple was dragged to court when a 62-year-old Nepali Brahmin, Bharat Jangam, moved the Supreme Court, asking to stop the Maoist government from interfering in religious matters.
The apex court ordered Maoist Prime Minister Pushpa Kamal Dahal Prachanda to halt the new appointments and maintain status quo till the dispute was resolved.
Facing worldwide outrage, the Maoist government removed Dahal and the Indian priests were reinstated.
Now, with the fall of the Maoist government, the new ruling coalition has formed a three-member team to select new priests from India.
The Pashupatinath Area Development Trust (PADT) that administers the shrine told IANS that the panel, headed by Mahabaleshwar, has contacted the four peeths - sacred monasteries - in the Indian states of Karnataka, Orissa, Gujarat and Uttarakhand founded by Hindu philosopher Adi Shankaracharya.
The four Indian monasteries will now shortlist suitable candidates who will be appointed by PADT after a screening examination and interview.
PADT has also decided to raise the number of priests at the Pashupatinath temple from the existing three in case of contingencies, like any of the priests falling ill or going home on leave.
However, the decision to revert to Indian priests has angered ousted Dahal, whose Jayatu Sanskritam Mahasabha organisation, supported by another body, the Sanskiritik Nawajagaran Andolan, has announced a new protest movement.
The movement has the support of the Maoists, who accuse India of trying to dictate in Nepal's religious matters as well.
But PADT remained unmoved.
"In a democracy, they have the right to protest," PADT said. "However, the government too has the right to implement its decisions."