Impacts of Extraordinary Appeal n. 593.849/MG

The (In)admissibility of the Complementary State Value Added Tax on the Substitution Regime

Abstract

In this paper, the author aims to analyze the fundamentals that support the decision handed down on the RE no. 593.849/MG judgment, in order to determine if their assumptions validate or refute State’s conclusions, in the sense that the article 150, paragraph 7º, of the Brazilian Constitution sustains the chance of charging ICMS (Brazilian Sales Tax) by compensating the tax already gathered on the “tax substitution method” when the value of the presumed triggering event is lower than the real one. For this purpose, it will consider the main reasons arisen from the RE no. 593.849/MG used as arguments on behalf of charging “compensatory ICMS-ST” (Brazilian Sales Tax on the “tax substitution method”), especially: (i) the argument of prohibition on unjustified enrichment of taxpayers; (ii) the limits of res judicata on the RE no. 593.849/MG decision; and (iii) the balancing of the tax practicability principle and the “ability to pay” principle as a solution for the issue. Finally, it will be made clear that none of the mentioned reasons is capable of maintaining the validity of the “compensatory ICMS-ST” charging.