The VAT dispute between PT HI and the tax authorities for the October 2020 tax period provides valuable lessons on prioritizing material truth over administrative formalities. The Respondent initially issued an Output Tax correction on asset sales and an Input Tax correction on spare parts procurement. The primary issues were reporting errors in the e-invoice columns and the use of Invoice Code 01 (collected) for transactions that should have used Code 07 (not collected).
The core of the conflict regarding Output Tax focused on the reporting of BC 2.5 transactions, which were eligible for VAT exemption but reported as "aggregated" (digunggung) by the Taxpayer. The Respondent deemed this as a taxable object. Meanwhile, regarding Input Tax, the Respondent rejected the credit for spare parts VAT because the seller used the wrong transaction code, even though the buyer had actually paid the tax.
In its resolution, the Tax Court Board of Judges took a progressive stance by overturning both corrections. The Board argued that reporting position errors caused by the technical limitations of the e-faktur program do not change the nature of the tax owed. Furthermore, the Board emphasized that issuing tax invoices is the seller's obligation; thus, a buyer acting in good faith who has paid the tax should not be penalized for the counterparty's administrative errors.
The implication of this ruling is a strengthened position for Taxpayers in disputes of an administrative-procedural nature. As long as the Taxpayer possesses strong proof of payment and clear goods flow related to business activities, formal errors can often be annulled in court. However, for benefit-in-kind expenses such as canteen LPG, the court consistently rejected the credit as they are deemed to have no direct technical connection to the main production chain.
tpc.consulting 
tpc.consulting 
info@taxindo.co.id