The São Paulo State Court has been passing sentences favorable to companies headquartered in São Paulo, ordering the São Paulo State Treasury Office (“SEFAZ/SP”) to analyze and issue administrative decisions on Services and Merchandises Circulation Tax (“ICMS”) accumulated credit benefit requests within a reasonable amount of time. In some cases, requests for credit use may take up to eight (8) months or more to be analyzed.
According to the State of São Paulo ICMS Regulation, taxpayers shall only use accumulated ICMS credit upon authorization granted by SEFAZ/SP. Traditionally, administrative decisions may be delayed for months and even for years, causing substantial financial loss to taxpayers.
Recently, a São Paulo State Court first instance judge gave a ruling granting the preliminary injunction requested by Claimant and urged SEFAZ/SP Tax Administration Executive Board to analyze and decide on claim for credit benefit within twenty-five (25) business days, under penalty of a daily fine.
This judgement can be deemed as a crucial milestone and will serve as precedent for taxpayers awaiting their administrative request for ICMS accumulated credit use to be analyzed and possibly authorized by the State Treasury Office. Such ruling can also be viewed as a judicial conquest for all citizens, considering that some administrative decisions are rendered within a timeframe that go beyond reasonable expectation.
The constitutional principle of reasonable duration of the process provided for in article 5, LXXVIII, of the Federal Constitution of 1988 interrelate with the constitutional right to petition and the protection of human rights. In this respect, delays in issuing administrative decisions have a direct and negative impact on citizens and legal entities, resulting into a violation of the principle of human dignity, for taxpayers end up being submitted to unjustified delays that may impair their activities and cause them financial prejudice.
The impulse given by the São Paulo State Court to enforce the principle of reasonable duration of the process brightens up the ICMS accumulated credit benefit landscape and give all taxpayers the hope that their requests will be processed within a reasonable timeframe, in application of the rights defended by the Brazilian Constitution.
Diego Carvalho de Souza Fonseca was an associate at Pacheco Neto Sanden Teisseire Law Firm.
Victoria Schulsinger was an associate at Pacheco Neto Sanden Teisseire Law Firm.
