Return Letter of Application for the Cancellation of Value Added Tax Assessment Letter Article 36 Paragraph (1) b Not Object of Lawsuit

The dispute was filed by the taxpayer, Heryanto, against the Directorate General of Taxes (DGT) through Letter No. S-453/WPJ.26/2021 highlights the ongoing tension between taxpayers’ substantive rights and administrative procedures within Indonesia’s tax system. The core of this case does not concern the amount of tax owed but rather the legality of the DGT’s return letter rejecting the taxpayer’s request for the cancellation of a Tax Assessment Letter (SKP), which the plaintiff claimed had violated his legal rights. The taxpayer filed the request for cancellation of the VAT assessment under Article 36 paragraph (1) letter b of the General Taxation Provisions Law (UU KUP); however, the DGT rejected it through an administrative return.

From the plaintiff’s perspective, two main arguments were presented. First, the return letter (S-453) was considered invalid because it was issued by an official who allegedly lacked authority and contradicted the delegation of functional authority set forth in PER-146/PJ/2018. The taxpayer argued that such authority should rest with the Director General of Taxes himself. Second, the plaintiff also asserted that the underlying SKP was legally defective, as it had been issued by an unauthorized official, and therefore should rightfully be cancelled through the mechanism provided under Article 36 of the UU KUP. In the taxpayer’s view, the DGT’s act of returning the request had effectively denied his right to challenge the legality of the SKP.

On the other hand, the DGT argued that the return of the request was legally justified under Article 14 paragraph (2) letter c of Minister of Finance Regulation (PMK) No. 8/PMK.03/2013. According to the DGT, the return letter did not constitute a decision subject to appeal but was merely an administrative notification indicating that the request could not be further processed, as a similar request had already been submitted and addressed previously. The DGT further emphasized that the Head of the Regional Tax Office acted lawfully on behalf of the Director General of Taxes, in accordance with the authority delegated under PER-146/PJ/2018.

The Tax Court ultimately rejected the plaintiff’s lawsuit. The Panel of Judges held that the return letter issued by the DGT was consistent with the prevailing regulations, particularly because the taxpayer’s request had been submitted repeatedly. Furthermore, the court adopted a formalistic stance, concluding that the return letter (S-453) did not constitute a “decision subject to litigation” under the court’s jurisdiction, as defined in Article 23 paragraph (2) of the UU KUP.

This decision underscores the importance of understanding administrative procedures in tax litigation, where procedural errors—such as submitting duplicate requests—can result in the loss of a taxpayer’s opportunity to challenge the substantive validity of a tax assessment.

A comprehensive analysis and the full text of the Tax Court Decision on this case are available here.