Brazilian ordinances attempt to subvert judicial decisions because of subsequent case law developments

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Brazilian ordinances attempt to subvert judicial decisions because of subsequent case law developments

The National Treasury Attorney-General's Office in Brazil is claiming that Supreme Court decisions can kill the effect of decisions in favour of taxpayers, allowing the authorities to charge taxes that were previously ruled out by the courts. However, as Joao Marcos Colussi of Mattos Filho explains, other courts do not agree

The National Treasury Attorney-General's Office has issued several ordinances over the past few years (Ordinances PGFN/CRJ No. 492/2011, 975/2011 and 396/2013), in which it has stated its position that changes in past jurisprudence caused by decisions handed down by the Federal Supreme Court (STF), in the context of "diffuse constitutional control" (controle difuso de constitucionalidade), "special appeals" (recurso repetitivo), and "concentrated constitutional control" (controle concentrado de constitucionalidade) proceedings have an impact on the Brazilian domestic legal system.

In practical terms, such STF decisions would result in the immediate and automatic cessation of the effectiveness of final tax judgments handed down in favor of taxpayers. According to the Federal Attorney for the National Treasury such a fact would mean the tax authorities would have grounds to charge taxes once deemed unconstitutional by a decision protected by substantive res judicata, if the tax triggering event related to such taxes occurs after the decision of the STF that altered past jurisprudence on that particular matter.

It should first be noted that the STF has never stated that its decisions should amount to innovative measures introduced in the existing legal system, capable of causing the prospective termination of the binding effect of prior final and unappealable tax decisions, where these are contrary to the STF’s understanding, as intended by the ordinances issued by the National Treasury Attorney-General's Office.

The Superior Court of Justice (STJ – see Special Appeal No 1.118.893/MG), in its turn, has expressly objected to the conclusions reached in the ordinances, stating that the STF’s decisions, even if in the context of concentrated constitutional control proceedings, do not amount to original legal circumstances capable of resulting in the termination of the binding effect of previous final tax decisions that are contrary to them.

Following this same line of reasoning, one can find countless other decisions handed down by other bodies of the judiciary, for example:

  • Superior Court of Justice (STJ) - Interlocutory Appeal to the Panel in Special Appeal No 1.172.619 - MG. (2009/0242441-4) on November 13;

  • Federal Court of Appeals for the 4th Region- Appeal/required reexamination No. 5006618-44.2012.404.7100/RS P Alegre 7/13. - Appeal/required reexamination No. 5001923-24.2010.404.7001/PR P Alegre 7/13; and

  • Civil Appeal No 5007019-83.2011.404.7001/PR, Porte Alegre 7/13.

that reject the argument put forward by the National Treasury Attorney-General's Office.

Hence, we conclude that the STF’s decisions do not amount to any change in the legal circumstances strong enough to have an impact on the binding effect of judicial decisions contrary to the STF’s understanding. It follows that the conclusions reached by the National Treasury Attorney-General's Office in its ordinances PGFN/CRJ/ No. 492/2011; PGFN/CNJ No. 975/2011 and 396/2013 should, in our view, be definitively ruled out since they not only lack legal grounds, but they shall also find great rejection within the bodies of the judiciary.

Joao Marcos Colussi (jmarcos@mattosfilho.com.br) is a partner of Mattos Filho in Sao Paulo

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