The "Strange" Lawsuit Granted by the Tax Court: Why a Taxpayer Sues a Cancellation Decision That Should Be Favorable?

Tax Court Decision on Procedural Defect Lawsuit of DGT Decision Plaintiff NH

Every tax administration decision issued by the Directorate General of Taxes (DGT), including those issued under Article 36 paragraph (1) letter b of the General Provisions and Tax Procedures Law (KUP Law), must strictly adhere to formal requirements and established procedures. This procedural requirement became the central focus of Lawsuit Number PUT-010645.99/2024/PP/M.XA Tahun 2025 filed by the Plaintiff NH against the DGT's Decision concerning the Cancellation of the Underpaid Tax Assessment Letter (SKPKB) for Income Tax (PPh) Fiscal Year 2018. While the cancellation of a tax assessment is generally a privilege for the Taxpayer, this Tax Court Decision paradoxically granted the lawsuit seeking to revoke the Cancellation Decision itself.

Formal Defect Issues and Legality of Defendant Decision

The core issue in this dispute is not the substance of the tax liability but the formal defect of the DGT Decision Number KEP-25900/NKEB/PJ/WPJ.15/2023. The Plaintiff argued that even though the PPh SKPKB 2018 was cancelled, the resulting Cancellation Decision was legally flawed due to procedural violations, such as failure to meet the stipulated timeframe for resolving the application or the incompleteness/vagueness of the decision's contents. According to the Plaintiff, this procedural breach created legal uncertainty and threatened the Taxpayer's rights in the future, thus necessitating the cancellation of the KEP so the DGT would be compelled to issue a legally perfect decision.

Tax Court Panel Examination and General Principles of Good Governance

In its examination, the Tax Court Panel focused on the formal legality of the KEP as a non-appeal administrative object (FORM-C2). The Panel invoked principles of public administration, including the General Principles of Good Governance (AUPB), which mandate the DGT to act professionally, accurately, and cautiously. The Panel found evidence that the Defendant had committed significant procedural or formal errors during the review process of the Taxpayer's application.

Implications of Granted Lawsuit for DGT and Taxpayers

The Tax Court Decision to Grant the Entire Lawsuit carries significant implications. The ruling directly annuls DGT Decision Number KEP-25900/NKEB/PJ/WPJ.15/2023. This cancellation forces the DGT to revert to the previous legal status and obliges it to issue a new, procedurally correct decision. The Panel's decision underscores that Taxpayers are entitled to demand formal compliance from the DGT in every administrative decision issued. This offers a strategic lesson for Taxpayers to always conduct formal due diligence on any decision received from the tax authority before considering the matter concluded.

A Comprehensive Analysis and the Tax Court Decision on This Dispute Are Available Here