Income Tax Equalization Cannot Serve as the Sole Basis for VAT Correction Without Evidence of Actual Delivery

PT BS Tax Dispute: Annulment of VAT Base Correction Based on Gross Profit Margin Assumptions

The tax dispute between PT BS and the Directorate General of Taxation (DGT) reached a decisive turning point when the Board of Judges annulled a VAT base correction amounting to IDR 295 billion. The core conflict originated from the Respondent's adjustment of the Cost of Goods Sold (COGS) in Corporate Income Tax, subsequently applying a 20.85% Gross Profit Margin (GPM) method to assume unreported additional turnover in the VAT Return for December 2020. The DGT argued that the Taxpayer's failure to adequately prove ending inventory values empowered examiners to utilize indirect methods pursuant to PER-23/PJ/2013.

PT BS's Refutation: VAT as an Objective Tax Predicated on Actual Delivery

However, PT BS rigorously refuted this assumption by presenting material evidence, including general ledgers, invoices, and independent auditor reports with an Unqualified Opinion. The Petitioner emphasized that VAT is an objective tax that must be predicated on the legal event of the actual delivery of Taxable Goods under Article 4 paragraph (1) of the VAT Law, rather than mathematical profit calculations or mere equalization.

Judicial Considerations: Equalization Tools and the Burden of Proof

In its legal considerations, the Board of Judges provided a fundamental resolution for legal certainty: equalization is merely a supporting tool (testing means) and does not constitute a legal basis for delivery. The Board underscored that since the Respondent could not provide evidence of the flow of goods, contracts, or invoices proving actual delivery to third parties, the correction must be overturned. This ruling reinforces the critical implication that the burden of proof regarding the occurrence of delivery rests with the tax authorities when asserting a VAT underpayment. In conclusion, indirect methods cannot override the physical facts of delivery within the VAT regime.