In analyzing Special Appeals 2034975/MG, 2035550/MG, and 2034977/MG (Topic 1191), the Superior Court of Justice (STJ) ruled that taxpayers are not required to prove that they bore the financial burden to request a refund of excess ICMS (Tax on the Circulation of Goods and Services) paid under the forward tax substitution regime. The decision was unanimously made by the ministers, who determined that when the actual tax base of the ICMS is lower than the presumed base, Article 166 of the National Tax Code (CTN) does not apply.
This judgment was made under the system of repetitive appeals, meaning that the decision must be followed by all courts in similar cases, except by the Supreme Federal Court (STF), and it is also binding on the Administrative Council of Tax Appeals (Carf).
Forward Tax Substitution and Its Implications
Under the forward or progressive tax substitution regime, the responsibility for the advance payment of ICMS falls on the first company in the product’s supply chain, based on an estimate of the final value of the goods. However, when the product reaches the retailer, the final sale price may be lower than the previously presumed value, allowing the taxpayer to request a refund of the excess tax paid.
STJ Decision and Article 166 of the CTN
Article 166 of the CTN stipulates that the refund of taxes that can be passed on to third parties will only be granted to those who prove they bore the financial burden or, in the case of transfer, that they are expressly authorized by the third party to receive the refund. Despite this, the STJ concluded that this requirement does not apply when it comes to forward tax substitution with an actual tax base lower than the presumed base.
The Tax Authority argued that Article 166 should be considered applicable, as it remains in effect and was not declared unconstitutional by the STF in the judgment of Topic 201, which ensured the refund of the difference in ICMS paid in excess under the forward tax substitution regime.
However, Minister Herman Benjamin, the case’s rapporteur, emphasized that the STJ’s understanding is already consolidated, citing precedents from both chambers of the court.
Approved Thesis
The thesis established by the ministers was clear: “In the forward tax substitution system, where the substituted party resells the goods for a price lower than the presumed base for tax collection, the condition set forth in Article 166 of the National Tax Code is inapplicable.”
The decision simplifies the process of refunding excess ICMS paid and eliminates the need to prove the assumption of the financial burden, providing greater legal certainty concerning operations subject to the forward tax substitution regime.