Taxpayers Cannot Be Penalized for Counterparty Failure in Port Service VAT Reporting

VAT Dispute Analysis: PT AFI and the Crediting of Input Tax via Third-Party Forwarders

Disputes over Input Tax credit often pose a significant challenge for Taxpayers (WP), particularly when transactions involve third-party intermediaries or forwarders. The case of PT AFI demonstrates that the Respondent's correction, based solely on negative confirmation results and discrepancies in the identity of the payer within the cash flow, can be overturned if the Taxpayer successfully proves the material and formal existence of the transaction. The core conflict arose when the Respondent rejected the VAT credit for port services because the invoice was issued by a third party (JICT), while payment was routed through a forwarder, coupled with a negative confirmation from the DGT system.

The Conflict: Formal and Material Inconsistencies vs. Industry Practices and Joint Liability Protection

The Respondent argued that under Article 13 paragraph (9) of the VAT Law, tax invoices must meet both formal and material requirements. Since the counterparty failed to report the invoice and there was an inconsistency in cash flow (payment to the forwarder instead of directly to the issuer), the Input Tax was deemed non-creditable. Conversely, PT AFI asserted that paying through a forwarder is standard practice in the logistics industry. Based on Article 16F of the VAT Law and Article 4 of Government Regulation No. 1 of 2012, a buyer cannot be held jointly and severally liable if they can prove the tax payment was made.

Judicial Bench Consideration: Primacy of Material Truth over Counterparty Reporting Status

In its legal deliberation, the Board of Judges stated that port service sales notes are specific documents equivalent to Tax Invoices pursuant to PER-13/PJ/2019. The Board emphasized that the material truth of the transaction takes precedence over the counterparty's reporting status. As long as the Taxpayer can provide valid evidence of the flow of goods/services and cash flow to the designated intermediary, the right to credit the Input Tax remains with the Taxpayer. Any failure by the counterparty to report VAT is a matter of DGT's supervision over the issuer, not a burden for the buyer.

Ruling Implications: Requirement of Orderly Correspondence Administration and Bank Statements

This decision provides legal certainty for industries utilizing port services via third parties. The implication is that the DGT cannot arbitrarily apply joint liability or negative confirmation arguments to invalidate Input Tax credits if the Taxpayer holds strong proof of payment. In conclusion, maintaining orderly administration of correspondence with forwarders and payment evidence (such as bank statements) is vital to winning similar disputes in the future.