Taxpayers Beware: Can DJP Still Correct Unilaterally Cancelled Tax Invoices by Business Partners?

Tax Dispute Analysis: Input Tax Confirmation and Unilateral Invoice Cancellation (PT EI)

The Tax Court Decision Number PUT-016394.16/2020/PP/M.XVIIIA Year 2025 reaffirms the importance of formal and material validity in input tax crediting, especially when facing confirmation results showing "non-existent" or "cancelled" data in the Respondent's system. This dispute centers on the Respondent's correction of PT EI's Input Tax amounting to IDR 6,988,271, which was denied because the invoice status from the counterparty was deemed invalid. The Respondent strictly adhered to the principle that Input Tax whose truth cannot be confirmed through the DGT's internal system does not meet the criteria for crediting according to Article 9, paragraph (8), letter b of the VAT Law.

Core Conflict: Cash and Goods Flow Verification

The core of the conflict in this case lies in the evidence of cash and goods flow, which are cumulative requirements for the material crediting of Input Tax. The Petitioner stated that they had made VAT payments to the partners and were unaware of any unilateral invoice cancellations by the counterparty. However, the Respondent assessed that without strong supporting evidence such as bank statements or complete goods receipt documents during the objection process, the Input Tax could not be recognized.

Judicial Consideration: Strength of Documentary Evidence

The Board of Judges, in its consideration, took a middle ground that relied heavily on the strength of documentary evidence. For one invoice worth IDR 1,000,000, the Board decided to grant the petition because the Petitioner was able to present consistent bank payment requests and invoices as evidence of cash flow. Conversely, the remaining correction of IDR 5,988,271 was upheld by the Board because the Petitioner failed to show concrete evidence that the transaction had actually occurred and the VAT had been paid.

Legal Implications for Taxpayers

This decision provides a real impact for Taxpayers to be more proactive in performing periodic reconciliations with counterparties. The legal implication is clear: the absence of notification of invoice cancellation by a counterparty does not automatically release the Taxpayer from the risk of correction if it is not accompanied by solid cash flow documentation. In general, the credibility of formal evidence in the form of tax invoices must always be supported by irrefutable material evidence to secure the right to credit Input Tax.