Coal No Longer Non-Taxable? PT KEL's Victory in VAT Dispute Based on PKP2B Contract.

Tax Dispute: Coal Classification as Taxable Goods for Generation III PKP2B Holders

The dispute regarding the classification of coal as Taxable Goods (BKP) for Generation III PKP2B holders has once again ignited a legal debate between tax authorities and taxpayers. The Respondent (DJP) issued a negative correction on coal exports worth IDR 88,850,437,228, arguing that coal is a non-taxable good pursuant to Article 4A paragraph (2) of VAT Law No. 42 of 2009. The Respondent maintained that coal not yet processed into briquettes is a mining product taken directly from its source, making its delivery not subject to VAT.

Legal Standing: "Nailed Down" Clause and the Lex Specialis Principle

However, PT KEL as the Appellant asserted that their legal position is "nailed down" to VAT Law No. 11 of 1994, as stipulated in their 1997 PKP2B contract. Based on that regulation, coal that has undergone crushing, washing, and blending processes to increase its caloric value has undergone manufacturing and is no longer categorized as a product taken directly from the source. The Appellant invoked the lex specialis derogat legi generalis principle, whereby the PKP2B contract holds the same status as a Law binding both parties specifically.

Judicial Decision: Validation of Manufacturing Processes

The Board of Judges agreed that PT KEL's tax treatment must follow the 1994 VAT Law per the PKP2B contract mandate. Court facts proved the existence of mechanical processing that altered the coal's physical characteristics to meet buyer specifications. This decision confirms that coal produced by Generation III PKP2B is a Taxable Good, thus the Respondent's correction lacked a strong legal basis. Consequently, the taxpayer is entitled to maintain its export status as a delivery of Taxable Goods subject to 0% VAT.

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