Justice prevents São Paulo tax authorities from charging ICMS-ST difference on fuels

Report published in Valor Econômico addresses a recent court decision that prevents the São Paulo State Treasury from charging the difference in ICMS-ST on fuels from the distributor Vibra Energia, during the period of freezing of the tax calculation base. Dr. Donovan Mazza Lessa, partner at Maneira Advogados, was heard in the report as a lawyer for the company responsible for the action.

Justice prevents São Paulo tax authorities from charging ICMS-ST difference on fuels

Decision protects Vibra Energia during the freezing of the tax calculation base

By Adriana Aguiar — From São Paulo

25/10/2022

Vibra Energia (formerly BR Distribuidora) obtained a ruling to prevent the São Paulo State Treasury from charging the difference in ICMS-ST (tax substitution) on fuels that were not collected during the period of freezing of the tax calculation base – still in force. The decision, given in preventive action, is the first we have heard about.

The freezing of the state tax calculation base was adopted last year by the States, following the rise in fuel prices. The measure would be a way to reduce the values at the pumps.

It was initially established by ICMS Agreement No. 192, published by the National Council for Financial Policy (Confaz) on October 29, 2021, and extended by other standards – in all of them, there was the adhesion of the State of São Paulo.

In practice, with this freeze, the ICMS-ST rate on gasoline in the State of São Paulo was reduced from 25% to 18%. A discount of R$0.35 per liter of S-10 diesel was also granted.

The measure came into force on November 1, 2021 and, initially, would last until July 31 of this year. During this period, ICMS-ST should be calculated based on the weighted average price to the final consumer (PMPF). Subsequently, the benefit was extended until December and it was established that the calculation basis would be the moving average of the PMPF over the last 60 months (article 7 of Complementary Law No. 192, of 2022).

Due to the fact that this freeze generated a difference, Vibra decided, as a preventive measure, to resort to the Judiciary. As ICMS is charged under the tax substitution regime, the amount of tax to be paid is assumed at the time of the first sale in the consumption chain and is then incorporated into the price.

The fear of receiving a charge is based on a decision by the Federal Supreme Court (STF). In 2016, ministers recognized the consumer's right to be reimbursed if they have overpaid tax (ADI 2777). After that, the Court began to understand that the Treasury is also responsible for charging in the case of underpaid tax.

In the process, the Treasury of the State of São Paulo argues that, based on the judgment of ADI 2777 and RE 593.849/MG, in the STF, it has the right to charge any difference that may exist, if the final price is different from the assumed one, which was consolidated in article 66-H, included by Law nº 17.293, of 2020, in State Law nº 6,374, of 1989.

According to the lawyer who advises Vibra Energia in the process, Donovan Mazza Lessa, partner at Maneira Advogados, given the STF's position, the company found it more prudent to file a preventive writ of mandamus. “And, in the end, it was a good measure because the State presented a response in the process saying that it could charge the difference”, he says.

In the decision, judge Josué Vilela Pimentel, from the 8th Public Finance Court of São Paulo, considers that, although there is this STF judgment that gave the right to reimbursement to those who paid ICMS-ST in excess, there is a two-way street, which also authorizes the Treasury to charge in the event of underpayment.

The judge, however, points out that the State of São Paulo adhered to all the agreements published by Confaz that allowed and extended the freezing of the ICMS-ST calculation base for fuels (Confaz Agreement nº 192/21 and later).

According to the judge, the measures were widely announced as being an effort by the State to help reduce the price of fuel at the pump. However, he adds in the decision, "apparently the State is not granting any benefit, as it intends to charge the petitioner for the difference that it claims to be giving up. In the popular saying: it does charity with someone else's hat."

Considering the volume of fuel sold by Vibra and its branches in the State of São Paulo, as well as the difference of R$0.35 per liter, one can imagine, says the judge, the amount that will be charged in a probable tax execution.

“In view of this figure, we can see the astronomical amount that will have to be spent to guarantee embargoes on tax enforcement”, says the judge in the decision. “In addition to other immediate consequences, such as the launch of the name in Cadin [Informative Register of Unpaid Credits], protests, positive tax debt certificates and all sorts of financial and legal disorders.”

For lawyer Donovan Lessa, who defends Vibra Energia, it was demonstrated that the speech about reducing the ICMS-ST was not true, as “the difference would be charged to the companies”.

Carlos Eduardo Navarro, from the firm Galvão Villani, Navarro, Zangiácomo and Bardella, considers that the judge was accurate. “In fact, the State of São Paulo, like the others, granted a type of tax incentive aiming to contain the rise in fuel prices, not only due to the tax rate, but also due to the calculation basis for retention”, he states. "If this incentive was given, it wouldn't make any sense to charge it back at the end. Otherwise, the State would give one hand to the refinery and take the other from the retailer", he adds.

These legal actions are necessary in states where there has been no change in the law, such as in São Paulo, when dealing with exceptional regimes, according to lawyer Luiza Leite, partner at Silva Gonzaga Leite Advogados. In Rio de Janeiro, for example, she states that this change has already occurred and, therefore, there would be no need to file a lawsuit.

When contacted by Valor, the State Attorney General's Office (PGE) of São Paulo did not respond until the close of the edition.

https://valor.globo.com/legislacao/noticia/2022/10/25/justica-impede-fisco-paulista-de-cobrar-diferenca-de-icms-st-dos-combustiveis.ghtml