Prohibition of Forced Offsetting Actions and Taxpayers Interest Reward Rights: PT IJDFSMT Case Study

The Directorate General of Taxes (DGT) is prohibited from conducting active collection or forced compensation of a Tax Billing Letter (STP) whose administrative sanctions arise from a Tax Assessment Letter (SKP) currently under appeal by the Taxpayer. In the dispute between PT IJDFSMT (Plaintiff) against the Defendant, the Tax Court Panel of Judges emphasized that the Defendant's action of offsetting the VAT overpayment for the July 2016 period to settle the VAT STP for the December 2016 period—which had not yet reached final legal force—was an action lacking a strong legal basis and violating the principle of legal certainty.

The Conflict Began When the Unilateral Compensation Prematurely Hindered Liquid Refund Use

The conflict began when the Plaintiff gained the right to a tax refund resulting from an Objection Decision. However, instead of refunding the funds, the Defendant unilaterally performed a compensation to settle tax debts in an STP that was materially being disputed at the appeal level. The Defendant argued that the compensation was carried out to secure state revenue and complied with technical collection procedures. Conversely, the Plaintiff argued that based on Article 27 paragraph 5a of the KUP Law and Article 48 of Government Regulation No. 50 of 2022, the amount of tax not agreed upon during an audit is not considered a collectible tax debt until the appeal decision is issued. This premature compensation caused the Plaintiff to lose the use of its funds for 53 months.

The Panel of Judges Agrees on Taxpayer Protections Against Non-Final Assessment Billing

The Panel of Judges, in its consideration, agreed with the Plaintiff. The Judges emphasized that tax regulations provide protection to Taxpayers so they are not billed for taxes whose legal status is not yet final. The compensation action by the Defendant was considered a form of collection that should have been suspended. Since the funds were unlawfully withheld since 2019, the element of delay in refunding tax overpayments has been legally fulfilled.

This Decision Carries Significant Implications Governing Statutory Hierarchies and Legal Certainty

This decision carries significant implications for tax practices in Indonesia, particularly regarding the Taxpayer's right to interest rewards. The case of PT IJDFSMT proves that tax administration must not ignore the hierarchy of regulations that grant a suspension of collection during the litigation process. The final verdict, which fully granted the Plaintiff's lawsuit, stipulates that the state is obliged to pay an interest reward of 65,529,813 IDR as compensation for the delay. In conclusion, Taxpayers hold a strong bargaining position to claim interest rewards if the tax authorities perform premature compensation on assessments that are not yet inkracht.