Unreported Invoices by Sellers Are Not the Buyer's Responsibility

Input Tax Credit Correction and Confirmation Dispute of PT PDL

The Value Added Tax (VAT) dispute involving PT PDL centered on the correction of Input Tax amounting to IDR 462,880,000.00, which the Respondent carried out because the confirmation response for tax invoices from PT BAS was "Non-Existent." The tax authorities insisted that the counterparty's failure to report the invoices formally invalidated the right to claim tax credits based on technical regulations regarding tax invoice confirmation.

The Core Conflict: Systemic Formal Fulfillment vs. Substantive Truth

The core of this conflict lies in the debate between systemic formal fulfillment and the substance of transaction truth. The Respondent based the correction on the tax information system results showing that the Seller had not reported the invoices in their VAT Return. Conversely, PDL, as the Petitioner, provided strong evidence that the transactions were genuine and not fictitious, attaching money flow evidence such as bank statements and transfer receipts showing that the VAT had been paid to the seller.

Judges' Legal Consideration: Joint Liability and Third-Party Negligence

The Board of Judges, in their legal consideration, emphasized that a Taxpayer's right to claim input tax credits should not be hindered by a third party's (seller) negligence in fulfilling administrative obligations. Referring to the joint and several liability principle as regulated in Article 33 of the KUP Law and clarified in SE-15/PJ/2018, the Judges argued that as long as the buyer can prove they have paid the tax, the burden of reporting responsibility lies entirely with the seller. A "Non-Existent" confirmation is merely an administrative indication that must be tested against material evidence.

Implications on Tax Audits and Material Truth Validity

The implication of this decision provides legal certainty for Taxpayers to maintain their tax credit rights as long as they are supported by organized document compliance, especially money flow evidence. This decision dismisses the automated correction actions by tax auditors who rely solely on confirmation responses without conducting a comprehensive material truth test. In conclusion, the material truth of VAT payment overrides systemic reporting failures at the counterparty level.

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