Processing of ST refund claims: FIFO method will be followed: FBR

The Federal Board of Revenue has informed the field formations that FIFO (First In, First Out) method would be followed for processing of sales tax refund claims filed under Rule 34 of the Sales Tax Rules, 2006.
Sources told Business Recorder here on Monday that the principle of FIFO means that the disposal of refund claims shall strictly be followed in date-wise order. The claimant who files their claims earlier would be treated on priority basis.
According to the FBR instructions, the principle of FIFO as explained in a past FBR letter is to be followed in cases of refund claims filed under rule 34 of the Sales Tax Rules, 2006.
The FBR said that the case has been examined and it is hereby clarified that as for the claim for refund, as per proviso to section 10(1) of the Sales Tax Act, 1990 if the excess amount of input tax is not fully covered by the tax payable during a period of one year following the tax period in which the credit first arose, the balance outstanding at the end of that period shall be refunded.
It appears an impression is being gathered that if a registered person has carried forward an amount accumulated after 12 months, that is claimed at the end of that period as a refund.
This is not the case. The excess amount balance has to be calculated on the principle of FIFO. Thus, if an excess amount arises in (Say) January, but is covered in the next two months, that chapter ends. Excess input arising in subsequent tax periods is a new chapter. Only if any excess amount arising in a particular tax period is not covered for a continuous 12-month period, then it will become refundable, the FBR added.