The First Panel of the Superior Court of Justice (STJ), in the judgment of Special Appeal No. 2,139,696/SP, held that Brazilian states may not simultaneously apply two different criteria to determine the presumed tax base under the ICMS Tax Substitution regime (ICMS-ST): the Weighted Average Final Consumer Price (PMPF) and the Value-Added Margin (MVA).
In the case at hand, the company had been assessed by the State of São Paulo for the period from July to December 2009, based on a hybrid methodology—using the PMPF base when it was lower than the actual transaction value and, otherwise, applying the MVA.
The core of the controversy lay precisely in this alternative/concurrent application of the two models, which created legal uncertainty for the taxpayer regarding the predictability of the criterion adopted by the state tax authorities.
The STJ held that there is no authorization under complementary legislation—in particular Complementary Law No. 87/1996 (the Kandir Law)—for states to combine two distinct presumed tax-base models concurrently.
The decision emphasizes the constitutional principle of tax legality (Article 150, I, of the Federal Constitution) and the principle of legal certainty, insofar as taxpayers must be able to reasonably foresee which criterion will be applied by the tax authorities.
The “forward” tax substitution regime—under which the substitute taxpayer anticipates the ICMS due by subsequent participants in the supply chain—presupposes the future occurrence of the taxable event and the advance determination of the tax base based on objective criteria.
Accordingly, the use of two distinct models undermines the logic of presumption and compromises predictability, as the substituted taxpayer would not know which criterion would ultimately be required. The STJ found that such a practice creates unacceptable legal uncertainty.
By establishing this understanding, the STJ reinforces that states must adhere to a single, clearly defined presumed tax-base model, avoiding discriminatory treatment or unexpected tax assessments. This represents a significant advancement for legal certainty in state taxation, particularly within the ICMS-ST regime.