Taxpayer Fails at the Formal Gate: Why Was Your Appeal Rejected Despite Strong Evidence? Lessons from a Tax Cancellation Decision Case

Tax regulations mandate restrictively that the Taxpayer's right to file a Tax Appeal (Banding) is strictly limited to an Objection Decision (Surat Keputusan Keberatan) issued by the Directorate General of Taxes (DJP), and it stringently requires compliance with a 3 (three) month filing deadline. A recent case study from the Tax Court (Decision Number PUT-011334.15/2024/PP/M.IIB Year 2025) has emphatically reaffirmed the fatal consequences for Taxpayers who fail to meet these formal requirements, even when the underlying material dispute (a Cost of Goods Sold correction) might have strong grounds for contestation. The primary focus of this decision rested upon two crucial and cumulative violations: an error in defining the object of the dispute and the late submission of the Appeal.

The core conflict in CV AT's case originated from a Corporate Income Tax dispute for the 2021 Tax Year, where a substantial correction to the Cost of Goods Sold (COGS) constituted the material issue. CV AT, believing it possessed comprehensive evidence (Purchase Orders, transfer slips) to successfully overturn the correction of service and other costs amounting to IDR 1,480,278,201.00 pursued the Appeal channel. However, instead of appealing against an Objection Decision, CV AT incorrectly directed the dispute against a Decision on the Cancellation of a Tax Assessment Letter based on Article 36 Paragraph (1) letter b of the General Provisions and Tax Procedures Law (UU KUP).

The DJP, on the other hand, correctly submitted a formal defense (exception) by invoking Article 31 paragraph (2) and Article 35 paragraph (2) of the Tax Court Law. The DJP asserted that the Article 36 (1) letter b Decision was not a legitimate object for a Tax Appeal, and factually, CV AT's Appeal was received after the mandatory 3 (three) month deadline stipulated by the law. This formal argument proved decisive.

In its resolution, the Tax Court Panel entirely disregarded all substantive considerations regarding the COGS correction and focused exclusively on formal compliance. The Panel legally opined that CV AT's object of Appeal was misdirected because Article 31 paragraph (2) of the Tax Court Law explicitly limits an Appeal solely to an Objection Decision. Furthermore, the time difference between the Decision date (July 02, 2024) and the Appeal letter receipt date (December 17, 2024) confirmed an undeniable violation of the filing deadline. Based on these two cumulative formal breaches, the Panel exercised its authority under Article 80 paragraph (1) letter d of the Tax Court Law to declare the Appeal inadmissible (Niet Ontvankelijke Verklaard).

The analysis of this decision carries significant implications for tax litigation practice. This ruling serves as a powerful reminder that the Tax Court prioritizes procedural compliance above all else. Taxpayers must meticulously differentiate between the Appeal channel (reserved for Objection Decisions) and the Lawsuit (Gugatan) channel (for non-objection administrative decisions like the Article 36 (1) letter b Decision). Failure to correctly navigate this choice of legal recourse, compounded by a strict filing deadline violation, will result in the material dispute, regardless of the strength of its argument, being dismissed at the preliminary stage.

A Comprehensive Analysis and the Tax Court Decision on This Dispute Are Available Here