Winning Against IDR 3.8 Billion VAT Correction: Judges Cancel Account Receivable Assumption Without Tax Invoice Evidence (090 - PUT-002998.16/2024/PP/M.XA Tahun 2025)

Burden of Proof in VAT Equalization: Challenging the Accounts Receivable Method (The PT ST Case)

In the context of tax litigation, the correction of the Value Added Tax (VAT) Tax Base (Dasar Pengenaan Pajak/DPP) derived from corporate income tax (CIT) turnover discrepancies often becomes a crucial point of dispute. A recent Tax Court Decision, Number PUT-002998.16/2024/PP/M.XA Tahun 2025, reaffirmed the fundamental principle of the burden of proof resting on the Directorate General of Taxes (DGT), especially when the correction method is based on Account Receivable Reconciliation. The PT ST case highlights the necessity of specific evidence over mere reconciliation assumptions, ultimately leading to a full grant of the appeal for the Taxpayer.

Core Conflict: Turnover Assumptions vs. Specific Evidence

The core of the conflict centers on the VAT DPP correction of IDR 3.8 billion imposed by the DGT. This correction was a derivative of the DGT's finding of increased CIT Turnover, obtained through the accounts receivable testing method. The DGT argued that unexplained cash receipts found during the test were presumed to be unreported sales turnover and, therefore, constituted Taxable Goods (BKP) Supplies subject to VAT as per Article 4 section (1) of the VAT Law. The DGT also dismissed the Taxpayer's formal grounds regarding the violation of the audit time limit, stating that such administrative issues do not automatically nullify the Tax Assessment Letter (SKP).

Taxpayer's Defense: Validating Non-Taxable Transactions

The Taxpayer comprehensively refuted the correction with material evidence. The Taxpayer acknowledged the discrepancy in the cash/bank books but demonstrated that the majority of the corrected receipts did not originate from sales. The evidence presented included loans from shareholders, internal fund transfers between the company's own bank accounts, and double-entry errors. These transactions, the Taxpayer argued, are explicitly non-VAT objects. Furthermore, the Taxpayer emphasized the DGT’s failure to specifically prove (with tax invoices or commercial invoices) when and to whom the BKP/JKP supply occurred, especially since the DGT used an arbitrary pro-rata division of the annual correction across 12 VAT periods.

Judicial Consideration: Validating Material Evidence

In its considerations, the Tax Court firmly addressed the material issue. The bench rejected the Taxpayer's formal argument regarding the audit time limit, consistent with jurisprudence that classifies it as an administrative norm without SKP nullification sanctions. However, the bench fully validated the evidence submitted by the Taxpayer. It was found that the DGT failed to justify the correction with solid proof of unrecorded VAT-bearing transactions. With the Taxpayer successfully proving that the source of the corrected funds was non-sales (loans/transfers), the bench concluded that the burden of proof required of the DGT under Article 12 section (3) of the KUP Law was not met.

Implications for VAT Litigation

This decision holds significant implications for VAT audit and litigation practices. It establishes a strong precedent that VAT Output Tax correction cannot solely rely on the assumption of CIT turnover reconciliation; it must be supported by specific evidence of VAT becoming due, namely a Tax Invoice, which indicates a BKP/JKP supply has taken place. For Taxpayers, this ruling underscores the critical importance of robust and segregated documentation for non-sales transactions (especially loans and internal transfers) to mitigate the risk of disputes arising from cash flow and accounts receivable testing by tax auditors.