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Impartiality: Condition of validity of the judgments rendered by the CARF

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After launching the Zelotes operation, the discussion on the restructuring of the Administrative Tax Appeals Council (CARF) was intensified. In relation to this, there are at least six bills pending before the Brazilian Congress, write João Marcos Colussi and Gabriel Mendes Gonçalves Issa of Mattos Filho.

In that context, there were significant discussions last year pointing out the nullities in some judgments rendered by the CARF, which judges proceedings involving tax issues in Brazil before the federal executive branch.

Dissatisfied with the judgments before CARF, some taxpayers seeking resolution before the judiciary branch obtained favourable decisions to cancel tax claims upheld in a judgment decided by the casting vote at the CARF. Such decisions, obtained at the judiciary branch, determined the stay of proceedings at CARF in cases where the CARF Internal Regulations had not been fulfilled, among other reasons.

As long as there are no legislative changes in the CARF structure, which is the main administrative court in Brazil, we need to focus on the present moment. The aim of this article is to strengthen CARF’s performance, so that it will once again be the main judge body in the cases involving federal taxes.

What is proposed with the present article is that the CARF should not become a mere “jurisdiction of transition” to the judiciary, maintained at the cost of significant funds from the public treasury.

For that purpose, it is important to remember that the Brazilian Constitution states that “no one shall be deprived of freedom or of his assets without the due process of law” (Brazilian Federal Constitution, Article 5, LIV) and which ensure compliance, in the administrative proceeding, with the “broad defence” and the “right to adversary proceeding” (Brazilian Federal Constitution, Article 5, LV). Based on these provisions, it can be noted that the constitutional configuration attributed to the administrative proceeding, especially to the tax proceeding – which has the power to expropriate part of the property of taxpayers –, is very similar to the legal proceeding.

It is probable that many of the current problems identified in the judgments rendered by the CARF would be resolved if the fundamental guarantees were actually complied with in practice.

For that purpose, it is crucial that the council members of the tax authorities and of the taxpayers, in the exercise of the duties as administrative judges, adopt some precautions in order to ensure impartiality in the judgments.

In exercising these duties, the CARF council members are there to judge and, accordingly, they should not act as defenders of the parties, who are already advised by prosecutors of the national treasury and by lawyers duly enrolled with the Brazilian Bar Association.

Regarding the position of the judge in the judgment, the opinion of jurists is that “the judge, because of his duty of impartiality, is placed between the parties, but equidistant from them: if he hears one of them, he shall not fail to hear the other (...) Only by summing up the partiality of the parties (one representing the thesis, the other, the antithesis) the judge may embody the synthesis in a dialectic process.” (Cintra, Grinover e Dinamarco, Teoria Geral do Processo, 30th Ed., page 74).

In our opinion, without going into the merits of the current structure of the body, we understand that isonomic treatment between the parties to the litigation is an essential condition to ensure impartiality.

Therefore, situations like those recently disclosed by the press, whereby a former council member provided his opinion during the judgment session of an appeal filed against an appellate decision to which this same former council member was the reporting judge at a lower court of the CARF itself only distances the court from its true purpose.

It cannot be supposed that any privileges granted to the national treasury in the administrative judgments could be justified by the alleged ‘principle of supremacy of the public interest’.

In fact, anyone who practices tax litigation – either in the administrative jurisdiction or in the judiciary – has certainly faced decisions and arguments of the tax authorities that seek to justify the maintenance of a given tax requirement based on the so-called ‘principle of supremacy of the public interest’.

However, the application of this principle could never justify any mitigation of the fundamental rights and guarantees, given that there should be no superior public interest than the respect for the constitutional rules and the democratic institutions.

When there is any type of favouritism to any of the parties, as mentioned above, the impartiality that characterises the due process is impaired.

In summary, the administrative proceeding is a condition of validity of the tax assessment. In turn, the validity of the administrative proceeding is indissociably conditioned to compliance with the due process. In this line, the Federal Supreme Court and the Superior Court of Appeals have repeatedly adopted the position of declaring the nullity of appellate decisions rendered in violation of the due process, such as, for example, in MS No. 11.766/DF and in RMS No. 26.029/DF, reported by Justice Carmen Lucia.

This article was written by João Marcos Colussi and Gabriel Mendes Gonçalves Issa of Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados.

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