Supreme Court asked to settle Timor tax dispute

JAKARTA (JP): Legal experts have called on the Supreme Court to immediately issue a guideline to settle the ongoing dispute between car producer PT Timor Putra Nasional (TPN) and the Directorate General of Taxation.

Bismar Siregar, a former justice, said on Friday that it is only the Supreme Court which would be able to clear up the dispute over TPN's duty and tax obligations.

"The Supreme Court's order is an irrefutable instruction that should be obeyed by other judges both at the district courts and the State Administrative Court (PTUN) in Jakarta," he said.

TPN has been involved in a dispute with the tax office over alleged unpaid import duty and luxury tax on the sedans it imported from South Korea's Kia Motor Co. since 1996.

TPN, controlled by Hutomo Mandala Putra, the youngest son of former president Soeharto, was appointed in 1996 by the government to develop the national car program.

The company was exempted from import duty and luxury tax for three years on the condition that the local content of the national car known as Timor would reach at least 20 percent in the first year of the program, 40 percent by the end of the second year and 60 percent by the end of the third year.

However, the tax office said the company never fulfilled the local content requirement and it was therefore subject to pay both import duty and luxury tax.

The tax office then ordered TPN to pay Rp 1.8 trillion in unpaid import duty and another Rp 1.6 trillion in luxury tax sales from the cars it imported and sold since 1996. It said it would confiscate the company's unsold cars if it refused to pay the duty and taxes.

TPN rejected the order and brought the case to PTUN to annul the tax office's decision.

The court ordered the tax office to temporarily delay its plan to confiscate TPN's 14,000 unsold Timor cars until it issued its final decision on the case.

The tax office, however, went ahead with its confiscation plan, arguing that PTUN did not have the authority to handle the case.

According to Bismar, it was wrong for PTUN to handle TPN's case.

"PTUN should have never received the petition because they are not authorized to do so," he said.

He also criticized TPN for handing over the case to PTUN.

"It is clearly stated in 1997 Law number 19 on Confiscation of Assets in a Tax Case that tax payers should make petitions or rejections against the tax office's decision only to the Board for Tax Dispute Settlement Agency (BPSP)," he said during a discussion on BPSP.

Vice chairman of BPSP Muslih Muchsin said TPN has never brought the case to the agency.

"We can't do anything since TPN did not report to us. It is too late to bring the case to BPSP," said Muslih, who was also present at the discussion.(cst)