Prohibition of Active Collection and Interest Reward Rights for Suspended Tax Appeals: PT IJFSM Tbk Case Study

The Directorate General of Taxes (DGT) is prohibited from conducting active collection actions, including unilateral tax offsetting, against tax assessments currently under appeal as stipulated in Article 25 (7) and Article 27 (5a) of the KUP Law. The dispute between PT IJFSM  and the Large Taxpayer Office Four serves as a crucial precedent regarding the taxpayer's right to interest rewards due to delayed refunds triggered by premature collection procedures

This Dispute Originated From the Defendant's Refusal of Legally Suspended Overpayment Claims

This dispute originated from the Defendant's refusal to grant interest rewards for the overpayment of VAT for the March 2016 period. The Defendant argued that the overpayment had been offset to settle a Tax Collection Letter (STP) for the December 2016 period. However, the Plaintiff emphasized that the STP was not collectible because the underlying Tax Assessment Letter (SKPKB) was under appeal, rendering the tax debt legally suspended. The Defendant's forced compensation was deemed a procedural violation that harmed the Taxpayer's liquidity rights.

The Board of Judges Evaluates Real Delays Incurred Under Applicable Compensation Regulations

The Board of Judges stated in their consideration that the right to collect taxes on amounts not agreed upon in the Objection Letter is suspended until the Appeal Decision is pronounced. Therefore, the compensation carried out by the Defendant against an STP that was not yet final and binding is legally invalid. The Tax Court emphasized that since the compensation was void by law, there was a real delay in returning the overpayment to the Plaintiff, which must be compensated with interest rewards in accordance with applicable regulations.

This Ruling Reminds Tax Authorities To Guard Constitutional Rights and Financial Restorations

This decision has significant implications for tax practice, particularly in protecting the constitutional rights of taxpayers during the litigation process. For PT IJFSM Tbk, this victory restores financial rights amounting to IDR 16,173,723.00 and provides legal certainty that the DGT cannot unilaterally seize tax overpayments to settle non-final disputes. Generally, this ruling reminds tax authorities to be more cautious in applying automated compensation systems if there are ongoing disputes.

In Conclusion Procedural Compliance Stands as an Absolute Requirement Under the Rule of Law

In conclusion, procedural compliance by tax authorities is an absolute requirement in a state governed by the rule of law. The Plaintiff successfully proved that the suspension of collection is a legally protected right, and any violation of that right resulting in delayed tax refunds must be accompanied by the provision of interest rewards as a form of compensation for the time value of money.