The dispute centers on the issuance of an Underpayment Tax Assessment Letter (SKPKB) for Article 23/26 Income Tax covering the period of April to December 2017, issued collectively (gunggungan) by the Directorate General of Taxes (DGT) against PT II. The core issue arose when the Respondent reclassified royalty and affiliate interest expenses into disguised dividends but incorporated them into a single legal product for multiple tax periods simultaneously.
The Respondent (DGT) defended its correction by arguing that royalty payments of IDR 15.9 billion and interest of IDR 1.8 billion to affiliates did not meet the Arm's Length Principle (ALP). Conversely, PT II strongly refuted the substance and raised a formal argument that the SKPKB was legally flawed because it combined nine tax periods into one assessment, which is deemed contrary to Article 12 paragraph (1) of the KUP Law.
The Tax Court Judges referred to Article 13 paragraph (1) of the KUP Law in conjunction with PMK-183/PMK.03/2015, which explicitly mandates that a Tax Assessment Letter (SKP) must be issued for each Tax Period, Part of a Tax Year, or Tax Year. The consolidation of nine periods into a single SKPKB was judged as a violation of the formal procedures. Consequently, without needing to deliberate on the material merits, the Judges declared the legal product invalid.
This decision reaffirms the supremacy of formal procedures in Indonesian tax litigation law. For PT II, this ruling provides legal certainty and the cancellation of all assessed tax liabilities. Administrative errors by tax officers, such as issuing a combined SKP for periodic taxes, can serve as an absolute basis for the annulment of a tax assessment at the appeal level, regardless of the material strength of the DGT's arguments.
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