Selective Litigation: A Crucial Lesson from the Panel's Upheld VAT Correction on Insurance Claims

In tax litigation, Taxpayers often focus on the disputed items with the highest value. However, the case of PT TPF (Decision No. PUT-004077.16/2024/PP/M.XXB Year 2025) provides an important case study on the crucial nature of comprehensive evidence and argumentation for every correction item. Aside from the issue of collateral sale, the company also disputed the correction of the Output VAT Tax Base (DPP PPN Keluaran) on the Insurance Premium Payment Claim amounting to Rp1,606,771,242.00 for the December 2020 Tax Period. This correction was the second material disputed item in the Underpayment Tax Assessment Letter (SKPKB) for VAT issued by the Directorate General of Taxes (DGT).

The DGT, as the Respondent, defended the VAT correction on this insurance claim, considering the claim as part of a taxable transaction. The conflict arose not from a fundamental difference in legal interpretation, but from the Taxpayer's passivity in rebutting this item during the court proceedings.

During the appeal process, the attention and focus of PT TPF's substantiation were massively diverted to the collateral sale item, which had a more explicit legal basis to be contested (the principle of non-retroactivity). Consequently, the Appellant failed to present substantive evidence or legal arguments to specifically nullify the correction on the Insurance Claim item. The lack of rebuttal accompanied by valid evidence on a particular item will be interpreted as an agreement.

The Panel of Judges analyzed this item independently. Adhering to the principle that the burden of proof rests with the Appellant, the Panel stated that since the Taxpayer did not present sufficient evidence or arguments, and there was no fundamental data difference with the Respondent, the Panel concluded that the correction was implicitly agreed upon. Therefore, the Panel of Judges decided to uphold the Output VAT Tax Base correction of Rp1,606,771,242.00 for the Insurance Premium Payment Claim item. Although the overall verdict (Amar Putusan) was "Fully Granted" because the cancellation of the collateral sale correction resulted in a Zero total VAT Underpayment, materially, the correction on this insurance claim item was still upheld by the Panel.

This case sends an important signal to Taxpayers currently undergoing litigation. Taxpayers cannot rely on winning one issue to cancel the entire Tax Assessment Letter (SKP). Each correction item is a separate legal battleground. Weaknesses in evidence or the absence of legal argumentation on one item will provide the Panel of Judges with a strong basis to uphold that correction, and could potentially backfire if the main dispute is ultimately won by the tax authority. Successful litigation is one that can systematically negate or cancel the corrections on every disputed item.

The comprehensive analysis and full judgment on this dispute are available here