The Anatomy of Truth in the Courtroom: A Deep Dive into Evidence and Decisions in the Tax Court

In the arena of tax litigation, victory is not won merely by loud claims, but through a solid construction of proof that meets statutory standards. This process is strictly regulated under Law Number 14 of 2002 concerning the Tax Court, which establishes the types of evidence, the role of the judge's knowledge, and the ultimate basis for a verdict. Understanding these three elements is key for Taxpayers to defend their rights.

The Five Pillars of Evidence (Article 69 paragraph 1)

The gateway to proof is opened by Article 69 paragraph (1), which exclusively lists five types of valid evidence in tax hearings. These five types are:

1. Letters or Writings (Surat): The prima donna of tax disputes, including invoices, contracts, tax returns, and corporate documents.
2. Expert Testimony: Opinions from individuals with special expertise needed to clarify a case.
3. Witness Testimony: Testimony from parties who saw, heard, or experienced the disputed event themselves.
4. Confession of the Parties: A firm statement from one party (Tax Authority or Taxpayer) admitting the opponent's claim.
5. Judge's Knowledge: A unique evidentiary tool derived from the judge's own understanding.

Diving into "Judge's Knowledge" (Article 75)

Often concerned as subjective assumption, Judge's Knowledge has a strict legal definition in Article 75. The article defines it as "matters known to and believed to be true by the Judge".

This is not mere intuition. Judge's Knowledge is the understanding gained by the Judge during the proceedings—for example, from directly observing evidence, transaction patterns revealed in court, or general facts that need no further proof (such as natural disasters or macroeconomic conditions). This knowledge acts as a bridge when physical documents alone are insufficient to explain complex economic realities.

The Golden Triangle of the Verdict (Article 78)

The culmination of all arguments and evidence lies in Article 78. This article asserts that a Tax Court Decision cannot be made arbitrarily but must be based on three inseparable elements:

1. Assessment of Evidence: The Judge must weigh the strength and relevance of the submitted evidence (Article 69).
2. Applicable Laws: The decision must be grounded in the prevailing tax laws.
3. Judge's Conviction: A crucial element defined in the elucidation as a conviction based on the assessment of evidence and in accordance with the law, not baseless belief.

If the Panel of Judges' deliberation does not reach a consensus, the decision is taken by majority vote.

Application in Tax Appeal Hearings

Let us look at its application in a dispute over a Management Fee Correction (Intra-group Services) deemed unreasonable by the Tax Authority (Appellee).

1. Evidentiary Stage (Articles 69 & 76): The Appellant (Taxpayer) submits Documents such as contracts, invoices, and transfer proofs. However, the Judge deems one piece of evidence insufficient (minimum 2 evidence rule). The Judge requests additional evidence such as Witness Testimony or Expert Testimony.
2. Application of Judge's Knowledge (Article 75): If the Tax Authority argues the service is fictitious, but the Judge sees intense email correspondence and tangible work outputs in court, the Judge uses Judge's Knowledge—that in business practice, such interactions reasonably incur costs—to be convinced of the transaction's existence, even if the formal contract has gaps.
3. Decision Making (Article 78): The Panel then assesses: Does the documentary and witness evidence (Element 1) support the existence of the service? Is the expense deductible under the Income Tax Law (Element 2)? Based on these, the Judge's Conviction is formed (Element 3).

Conclusion

Tax disputes are a battle of factual reconstruction. By presenting at least two valid pieces of evidence (Article 69), the Taxpayer helps shape the Judge's Knowledge (Article 75), which ultimately builds the Judge's Conviction to render a just decision pursuant to Article 78.