The trial of RE 574.706, which excluded ICMS from the calculation basis for PIS and COFINS, ended this Thursday. By eight votes to three, the effects of the decision were modulated, which will come into effect on March 15, 2017, the date on which this understanding was established by the Supreme Federal Court, except for legal and administrative actions filed up to this date. The STF Plenary also determined that the ICMS to be excluded is the one highlighted on the invoice, and not the tax collected.
By majority, the objections filed by the Federal Union were partially accepted, only to modulate the effects, remaining rejected regarding the allegation of omission or obscurity, and the ICMS highlighted in the note prevailed for the purposes of exclusion from the PIS/COFINS base.
Justice Cármen Lúcia, the rapporteur of the case, when voting to modulate the effects of the decision, argued that the guidance of the Superior Court, in terms of general repercussion, breaks with the jurisprudence consolidated until then by the Superior Court of Justice. In addition, she emphasized that the delimitation of the effects aims to preserve the legal certainty of the tax authorities.
Seven other justices agreed with the rapporteur: Alexandre de Moraes, Dias Toffoli, Nunes Marques, Ricardo Lewandowski, Roberto Barroso, Gilmar Mendes, and Luiz Fux. Justices Rosa Weber, Edson Fachin, and Marco Aurélio Mello voted against any type of modulation of the effects. According to Justice Edson Fachin, the loss of federal revenue is not a valid reason to justify the modulation of the effects. In the same line of reasoning, Justice Rosa Weber stated that the budgetary impact did not constitute sufficient grounds, and also assessed that there was no sudden change in case law, but rather a reaffirmation.
Minister Luiz Fux, the last to present his vote, weighed up the risk of excessive modulation of decisions, encouraging convenient and useful unconstitutionality. However, he voted for modulation of the effects in this case, arguing that: “this surprise that imposes a modulation on us is linked to the pandemic moment, the guarantee of governability”.
It should be noted that the modulation of the effects does not come as a surprise, since a result like this was already expected, given the current economic scenario in which the country finds itself, amid the crisis generated by the pandemic, and the billion-dollar impacts of this decision on the public coffers. Even so, the conclusion of the largest tax case in the country represents a victory long awaited by taxpayers.
It is worth mentioning that the effects of the decision, for companies that had already filed a lawsuit: (i) if the decision has not become final, the final decision must follow what was decided by the STF, determining the exclusion of the ICMS highlighted in the invoice, and the recovery of credits from 5 years prior to the filing of the initial lawsuit (if filed up to 03/15/2017), or since March/2017 if filed later; (ii) if the decision has become final less than 2 years ago, in the event that the sentence was different from the Supreme Court's verdict, it may be re-discussed in a rescission action. However, the success of this action is debatable; (iii) if the decision has become final more than 2 years ago, the finality of the decision is consolidated for purposes of compensation or refund.
Finally, for companies that have credits to recover and have not yet filed a lawsuit, immediate distribution is recommended in order to ensure future tax savings and claim credit recovery from March 2017.