The Allegation of Fictitious Tax Invoices Overturned: The Purchaser Acting in Good Faith Wins the VAT Appeal Against the DGT!

A dispute concerning Value Added Tax (VAT) regarding the rejection of Input Tax credits has once again emerged in the Tax Court, reinforcing the critical importance of proving the good faith of the purchasing Taxpayer. Decision Number PUT-008979.16/2024/PP/M.XXA of 2025 involving PT NPS against the Director General of Taxes (DGT) serves as a key case study in VAT litigation. This matter originated from the DGT's correction of the Input Tax for the April 2022 Tax Period. The correction was asserted because the DGT identified that the tax invoices credited by the Petitioner originated from a Taxable Enterprise (PKP) indicated as a fictitious PKP, which could not be located or had failed to report the corresponding Output Tax invoices.

The Core Conflict: Dual Requirements of VAT Crediting Between Formal and Material

The core of the conflict within this case centers on the dual requirements of VAT crediting: formal and material. The DGT, as the Respondent, explicitly stated that the Input Tax violated material requirements because it was not based on an actual transaction (fictitious), and therefore must be annulled in accordance with Article 9 Paragraph (8) of the VAT Law. On the other hand, the Petitioner maintained its position that the tax invoices in its possession had been validly issued through the e-Faktur system, and most crucially, the Petitioner was able to present clear proof of the VAT payment for the transaction. The Petitioner argued that it had acted as a purchaser in good faith, and thus any issues regarding non-compliance or the fictitious status of the Vendor PKP should be a matter for the Respondent's law enforcement.

Resolution: Panel of Judges' Focus on the Burden of Proof and Good Faith Protection

The resolution to this conflict came from the Panel of Judges of the Tax Court, who focused heavily on the burden of proof. The Panel assessed that the Petitioner had submitted sufficient supporting documentation, including bank transfer slips proving that the VAT payment had been executed. The determining key to the ruling was the Respondent's failure to prove any collusion or knowledge on the part of the Petitioner regarding the fictitious status of the Vendor PKP. As long as the purchasing Taxpayer can demonstrate good faith and successfully prove the actual delivery of Taxable Goods or Services (BKP/JKP), the credited Input Tax cannot be annulled. Consequently, the Panel of Judges entirely granted the appeal, overturned the correction, and restored the Input Tax crediting rights to PT NPS.

Significant Implications and Material Evidence Retention Strategies

The implications of this ruling are highly significant for the Taxpayer community and tax litigation. This decision reinforces the principle of protection for purchasers acting in good faith and places a high burden of proof on the DGT in cases involving fictitious tax invoices. Taxpayers' strategies must shift from merely ensuring the formalities of tax invoices to prioritizing the retention of material transaction evidence, particularly proof of VAT payment, as the primary line of defense when facing Input Tax crediting disputes.