The tax dispute between PT SSTI and the Directorate General of Taxation (DGT) centered on the correction of Input Tax amounting to IDR 561,254,073.00, which was declared non-creditable due to a "Non-Existent" (Code E) clarification response. The core issue in this case is the conflict between the actual evidence of cash and goods flow held by the buyer and the administrative VAT reporting compliance at the seller's level. Although PT SSTI had settled all payment obligations, including VAT, to the vendor, the absence of reporting these tax invoices in the tax information system led the DGT to doubt the material validity of the transaction from the perspective of state revenue.
The conflict escalated when PT SSTI claimed legal protection based on valid bank transfer evidence, while the DGT insisted on the formal procedure of tax invoice clarification in accordance with the Decree of the Director General of Taxation Number KEP-754/PJ./2001. PT SSTI argued that they should not bear the tax burden (joint liability) if the seller fails to remit the collected tax, as long as the buyer can prove that payment has been made. Conversely, the Respondent assessed that without reporting by the seller, there is no VAT entering the state treasury that can be offset or credited by the buyer within the VAT credit method mechanism.
The Tax Court Judges ultimately rejected PT SSTI's appeal, considering that the requirements for crediting Input Tax are cumulative, covering both formal and material correctness. The judges emphasized that the burden of proof for transaction validity lies with the Taxpayer, and in this case, the Taxpayer was deemed to have failed in ensuring that their counterparty was a compliant Taxable Person (PKP). This ruling reinforces that evidence of payment alone is not strong enough to override a "Non-Existent" clarification result; thus, the joint liability principle as stipulated in Article 16F of the VAT Law remains applicable to the buyer if the tax remains uncollectible from the seller.
The implications of this ruling for business actors are significant, particularly regarding the importance of "know your vendor" procedures in every business transaction. Failure to credit large amounts of Input Tax can suddenly disrupt a company's cash flow. Companies must be more proactive in monitoring the tax invoice reporting status of their counterparties through the e-Faktur application and ensuring that vendors have a good reputation for tax compliance to avoid the risk of similar corrections in the future.
A Comprehensive Analysis and the Tax Court Decision on This Dispute Are Available Here
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