In a unanimous decision handed down in Cases 10340.720664/2023-96 and 10340.720335/2022-64, the 1st Panel of the 1st Chamber of the 3rd Section of the Administrative Tax Appeals Council (CARF) recognized the extension of the effects of a final and unappealable court decision obtained by the company’s headquarters to its branches, ruling out the triggering of Excise Tax (IPI) on the resale of imported goods.
In the case at hand, the headquarters, as the importer, obtained a court decision granting it the right not to pay IPI on resale operations following importation. The operations consisted of remitting the goods to its distribution center, which was responsible for distributing the products to the chain’s retail establishments nationwide. The tax authorities argued that the distribution center should pay the IPI on outbound remittances to the branches because it is treated as an industrial establishment under Article 9, II, of Decree No. 7,212/2010 and also because they understood that the effects of the decision obtained by the headquarters would not automatically extend to the other establishments of the same legal entity.
CARF dismissed the tax assessment as unfounded, under the terms of the Reporting Councilor’s vote, according to which, as branches without legal autonomy, it is legitimate for the headquarters to challenge the tax assessment concerning its secondary establishments, as decided by the Superior Court of Justice (STJ). The Reporting Councilor further concluded that the transaction in question did not constitute a resale to third parties but rather a mere internal transfer of goods between establishments of the same legal entity.
Although this is a lower court ruling, it holds significant importance for CARF regarding the tax treatment of IPI in transactions involving distribution centers and subsidiary retail establishments.