When a Tax Invoice is Unilaterally Canceled by the Seller, Is the Buyer's Right to Credit Input VAT Forfeited?

PT PL was involved in a Value Added Tax (VAT) dispute questioning the legal protection afforded to a compliant buyer. The central issue was the correction of Input VAT (PM) on a Tax Invoice (FP) that the Taxable Entrepreneur (PKP) Seller had unilaterally canceled through the e-Faktur system.

The Directorate General of Taxes (DGT) argued that such a cancellation eliminated the formal validity of the document, making the Input VAT ineligible for crediting.

The essence of this conflict pits formal administrative compliance against the material justice of the transaction. The DGT insisted on the forfeiture of the credit right due to a formal defect, but PT PL strongly refuted this. The Appellant was able to provide irrefutable evidence that the Taxable Goods or Services had been received, and most crucially, that the VAT had been paid to the Seller.

This rebuttal strategically relied on Article 16F of the VAT Law concerning joint and several liability (tanggung jawab renteng), which affirms that the Buyer's liability lapses if they can prove the VAT payment.

In its resolution, the Tax Court Panel explicitly sided with material justice. The Panel asserted that the Appellant had fulfilled its substantive obligation as the Buyer. The unilateral cancellation by the Seller—which is an administrative error or risk borne by the Seller—should not invalidate the Input VAT crediting right of an honest buyer who has settled their liability. The Panel decided to annul the DGT's correction on this item.

This analysis carries significant implications: The Tax Court will grant protection to a PKP Buyer who can provide complete evidence of both the flow of money and the flow of goods, confirming that formality does not always override substance in VAT cases.

The comprehensive analysis and full judgment on this dispute are available here