The Federal Supreme Court (STF) began, on May 6 of this year, in a virtual plenary session, the long-awaited judgment of two extraordinary appeals with general repercussion concerning the limits of the temporal effects of res judicata in tax matters.
In Extraordinary Appeal (RE) 949.297 (Topic 881), of the authorship of Justice Edson Fachin, one discusses whether the decision isued by the STF in concentrated and abstract control of constitutionality would be[1] apt to cease the temporal effectiveness of res judicata previously obtained by the taxpayer or the Public Treasury to the contrary.
The specific case refers to the situation of a taxpayer that obtained a final and unappealable court decision in its favor in a separate lawsuit, to stop paying the Social Contribution on Net Profit (CSLL), under the argument that the law that created[2] the tax was formally unconstitutional. Later, however, in the judgment of Direct Unconstitutionality Action (ADI) 15/DF, the STF declared the constitutionality of the law, validating the collection by the National Treasury.
In summary, the Treasury argues that the res judicata obtained by taxpayers in this situation does not prevail for future taxable events, i.e., those occurring after the STF's decision to the contrary in ADI 15/DF.
The Treasury claims that, since this is a relationship of successive treatment (which is renewed at each taxable event of the tax liability), the prevalence of such individual decisions would go against the normative force of the Federal Constitution, as declared by the STF, and the principles of equality and free competition. This is because, due to the binding effect and general effectiveness of the STF's decisions, the other taxpayers who have no res judicata of their own (the majority) would continue to be subject to the tax requirement.
In RE 955.227 (Topic 885), for which the reporting judge was Justice Roberto Barroso, the STF's decisions handed down in extraordinary appeals (diffuse control of constitutionality) are being examined to determine whether they can cause the res judicata on a tax relationship to cease to have effect in the future when the decision is based on the constitutionality or unconstitutionality of the tax.
This concrete case also deals with the CSLL requirement, but exclusively from the perspective of diffuse control of constitutionality. The National Treasury defends suspension of the effects of res judicata for taxable events occurring after "repeated decisions" of the STF that declared the unconstitutionality of the levy and were issued in extraordinary appeals without recognized general repercussion (before the very existence of the system) and before the judgment of ADI 15/DF.
In both appeals, the Justices must also decide whether the temporal efficacy of the res judicata is automatically broken as of the advent of a decision issued by the STF in the scope of control of constitutionality that is contrary to the meaning of the individual judgment,[3] regardless of an action for vacatur.
Although there are STF decisions that uphold the res judicata formed by decisions that go against the prevailing supervening case law of the Court itself, the votes cast in Extraordinary Appeals 949.297 and 955.227 adopt the position that the interruption of the temporal effects of the res judicata is constitutional in successive tax legal relations when the STF decides otherwise in extraordinary appeals with general repercussion or through the concentrated control of constitutionality.
Although the judgment of the appeals was interrupted by a request for review of the record by Justice Alexandre de Moraes on May 12,[4] the Supreme Court is in the process of establishing a theory of significant legal and economic repercussion, whose criteria may reactivate the levying of tax requirements set aside by final and unappealable decisions in countless other tax disputes, in a true "domino effect".
In RE 949.297, Justice Fachin (reporting justice) voted for automatic breaking of the effects of res judicata by the effectiveness of STF decisions in concentrated and abstract control of constitutionality (ADI, ADO, ADC, and ADPF). The filing of an autonomous action for vacatur would therefore be unnecessary.
For the Justice, abstract constitutional decisions of the STF can change the legal status of a continuous tax relationship, but only in relation to future taxable events, occurring as of publication of the minutes of the judgment. In other words, even if the legal and tax relationship between the taxpayer and the State has been stabilized by prior res judicata, the new legal rule established by a STF precedent would be immediately and automatically effective, overriding any final and unappealable decision to the contrary.
The reporting judge made an express proviso as to the:
- impossibility of retroactivity of case law, prohibiting extension of the legal effects emanating from the decision on constitutionality to facts of the past; and
- need to observe the rules of non-retroactivity and anteriority (annual, ninety day enactment period, and ninety day notice period, depending on the tax). The date of publication of the act of judgment of the STF decision must be equivalent to the first day of effectiveness of the new rule. The opinion also indicates that the effects of this understanding should be subject to softening.
The theory proposed by the opinion was as follows:
"The temporal efficacy of substantive res judicata derived from a tax relation of continuous treatment has as a condition subsequent that it is implemented with the publication of the minutes of a subsequent judgment held in an abstract and concentrated control of constitutionality by the Federal Supreme Court, when the commands of the decision are opposed, observing the constitutional rules of non-retroactivity, annual anteriority, and the ninety day effectiveness or ninety day notice requirement, according to the type of tax in question.
Justice Barroso concurred with Justice Fachin's conclusions for automatic termination of the effects of res judicata upon a decision by the STF in a concentrated control of constitutionality. In addition, however, his opinion expressly attributed this same limiting efficacy of res judicata to decisions rendered by the STF in extraordinary appeals with recognized general repercussion (diffuse control of constitutionality), based on the theory of constitutional change of article 52, X, of the Federal Constitution
According to the traditional understanding (based on the literalness of article 52, X), for a decision by the STF rendered in diffuse control of constitutionality (in an incidental manner in the judgment of an extraordinary appeal) to have binding effect and general effects, it is necessary that the Federal Senate issue a resolution to suspend the execution, in whole or in part, of the law declared unconstitutional.
The decisions handed down in concentrated control (ADI, ADO, ADC, and ADPF), in turn, due to article 102, paragraph 2, of the Constitution, are already endowed with such attributes, regardless of the intervention of the Senate.
For Justice Barroso, due to the evolution of the general repercussion system in our legal system, the Senate’s resolution, provided for in article 52, X, of the Constitution, would serve only to publicize the STF's decision, but not to restrict its effects. In other words, both the STF's decisions handed down in concentrated control and those handed down in diffuse control should produce the same legal effects.
Supported by this reasoning, Justice Barroso proposes the establishment of the following theory:
“1. The decisions of the STF in incidental control of constitutionality, prior to the institution of the general repercussion system, do not automatically impact on the res judicata formed, even in successive tax legal relations. 2. On the other hand, the decisions handed down in direct actions or in decisions with general repercussion automatically interrupt the temporal effects of final and unappealable decisions in the aforementioned relations, respecting the principle of non-retroactivity, annual anteriority, and ninety day effectiveness, or ninety day notice, depending on the nature of the tax.”
Justice Gilmar Mendes, despite also finding for automatic break of final and unappealable decisions with regard to future events, due to the STF's decisions handed down both in concentrated and diffuse control with general repercussion, diverged from the reporting judge of this trend, believing that it is unnecessary to observe tax anteriority to reestablish a tax.
The Justice also discusses the case of an action for vacatur provided for in the civil procedural legislation to establish the understanding that it would be possible to propose such a measure, based on the STF’s decision, to also vacate the res judicata in relation to past taxable events.
Before the request for review of the record, Justice Rosa Weber and Dias Toffoli[5] followed Justice Edson Fachin's opinion. With that, the partial result in RE 949.297 is:
- four votes for automatic termination of the effects of res judicata, regardless of an action for vacatur, observing the rules of anteriority/retroactivity, as of the STF decision rendered in ADI, ADC, ADO, and ADPF, for future taxable events (subsequent to the STF’s decision);
- one vote for:
- automatic termination of the effects of the res judicata in relation to future taxable events, regardless of an action for vacatur, without observing the rules of anteriority/retroactivity; and
- for the possibility of an action for vacatur in relation to past taxable events, in order to reverse the res judicata based on the STF's decision in a concentrated control of constitutionality or general repercussion.
In RE 955.227 in turn, Justice Barroso, opening the opinion as reporting judge, replicated the understanding expressed in RE 949.297, focusing on the constitutional change of article 52, X, of the Constitution and the attribution of the same legal effects typical of decisions in ADCs, ADI, ADO, and ADPF to the decisions of extraordinary appeals with general repercussion.
In the end, the Justice rejected the Federal Government's claim in the case, proposing, however, the same theory of general repercussion suggested in Topic 881, already pointing out the need for softening of the effects of the decision, which was fully accompanied by Justices Dias Toffoli and Rosa Weber.
In both judgments, Justice Barroso stated that the criterion to be defined by the STF also applies to successive tax legal relations in which there is a final and unappealable decision favorable to the Public Treasury. The proviso is relevant, for example, for taxpayers who have a final and unappealable decision against them on issues decided against the Treasury, such as the exclusion of the ICMS from the PIS and Cofins tax bases.
In RE 955.227, before Justice Alexandre de Moraes' request for examination of the case record, only Justice Gilmar Mendes' vote was cast, also to the same effect as the vote cast in Topic 881, that is, admitting the filing of an action for vacatur for the purpose of undoing a res judicata contrary to the STF's decision in a concentrated control of constitutionality or general repercussion for taxable events occurring prior to the STF's decision.
With this, there are currently three votes in RE 955.227 for automatic suspension of the temporal effects of the res judicata in relation to future taxable events, regardless of an action for vacatur, observing the rules of anteriority/retroactivity, also in the event of a res judicata contrary to the STF’s decision rendered under the general repercussion system.
As of the closing date of this article, the judgment was not expected to resume. The votes of Justices Alexandre de Moraes, Cármen Lucia, Luiz Fux, Ricardo Lewandowski, Nunes Marques, and André Mendonça are expected.
In addition to the dispute regarding the CSLL, which already has the potential to generate billion-dollar financial impact, the outcome of topics 881 and 885 will affect other highly relevant tax disputes. This is the case of the levy of social security contributions on the constitutional one third vacation bonus, for which many taxpayers obtained a final and unappealable favorable decision, based on the understanding of the Superior Court of Appeals, before the Federal Supreme Court declared the constitutionality of the levy in the judgment of RE 1072485, with general repercussion (Topic 985).
As soon as the judgment of RE 955.227 and RE 949.297 is resumed by the STF, our comments will be updated, with an analysis of the theories established and their impacts.
[1] Under the terms of Law 9,868/1999, the exercise of concentrated and abstract control of constitutionality is the exclusive competence of the STF and must occur within the scope of a Direct Action of Unconstitutionality (ADI), a Direct Action of Unconstitutionality by Omission (ADO), a Declaratory Action of Constitutionality (ADC), and an Argument of Noncompliance with a Fundamental Precept (ADPF).
[2] Law No. 7,689/88.
[3] "Individual judgment" herein is treated as synonymous with a judgment rendered in a proceeding of the nature of subjective (and not strict) liability, which includes claims filed with joinder of plaintiffs and collective claims, filed to defend the right of a category or class.
[4] There is no forecast for its return to the agenda.
[5] This with the proviso that, in the case of constitutionality of the CSLL, the res judicata obtained by the taxpayers lost their effectiveness only after 90 days had elapsed from the date of publication of the minutes of the judgment on the merits of ADI 15/DF, in observance of the principle of anteriority.
