The legal dispute between PT LTD and the Directorate General of Taxes (DGT) underscores the rigidity of administrative procedures in Indonesian formal tax law, specifically regarding the application of Article 36 paragraph (1) letter b of the KUP Law. The conflict arose when the DGT issued Letter Number S-75/WPJ.30/2019, returning PT LTD's application for the reduction or cancellation of an incorrect VAT Assessment for August 2011. The core of the conflict lies in PT LTD's attempt to annul a tax assessment deemed materially incorrect based on precedents from other tax periods, which was hindered by the fact that PT LTD had previously pursued an objection for the same assessment.
The DGT argued that, by regulation, an application under Article 36 paragraph (1) letter b of the KUP Law can only be filed if the Taxpayer has not filed an objection against the said assessment. Conversely, PT LTD felt entitled to material justice because Input Tax corrections on promotion costs for other tax periods had been overturned by the Tax Court. However, the Board of Judges emphasized that formal legal certainty must prevail. Since PT LTD had filed an objection and even an appeal (although the appeal was declared inadmissible), the cumulative requirements in PMK Number 8/PMK.03/2013 were not met.
This decision has a significant impact, warning Taxpayers to be more cautious in choosing litigation strategies. A formal failure at the appeal stage cannot be rectified through the administrative route of Article 36 of the KUP Law if the objection procedure has already been initiated. In conclusion, a Taxpayer's administrative right to request the cancellation of an "incorrect" tax assessment is legally forfeited once the objection option is taken, regardless of the strength of the material arguments held.
A Comprehensive Analysis and the Tax Court Decision on This Dispute Are Available Here
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