The Superior Chamber of the Tax and Fees Court (TIT) of São Paulo has ruled out the ICMS charge on medical products that were not covered by Agreement 01/1999 of the National Council for Tax Policy (Confaz), which listed exempt items at the time of the assessment. The judges decided that coils, platinum spirals used in surgeries to prevent aneurysms from rupturing, are exempt from the tax, even though the list of exemptions only expressly mentions clips, which have the same function. The vote was 9 to 6 in favor of granting the taxpayer's appeal.
The decision sets a precedent for other products not expressly mentioned in agreements to be considered exempt. The court had already made a similar decision in 2020, but the case involved the same medical product made with different raw materials. This time, the dispute involves different products with the same use. The TIT is a court that judges administrative cases involving state taxes in São Paulo.
In the case tried in 2020, the Superior Chamber of the TIT waived the ICMS tax on stents (case 4.090.891-4), used in heart surgeries. At the time, the discussion was about the material that made up the equipment, made of stainless steel and cobalt chrome. The inspection agency fined the taxpayer because the raw material was different from that described in Agreement 1/1999. However, by 8 to 5, the TIT judges dismissed the charge.
In the case of coils (case 4.092.718-0), judged on July 7, CMS Produtos Médicos Ltda. was fined in 2012, still under Agreement 1/1999, for not collecting ICMS on the items. Later, Agreement 149/2013 would include coils in the exemption list. Platinum coils are considered an evolution in treatment in relation to clips.
The company appealed the fine, arguing that coils are equivalent to paper clips. However, it lost in the first and second instances. In the Superior Court, the rapporteur of the case, Judge Marco Teixeira, also denied the taxpayer's appeal. The judge based his vote on article 111 of the National Tax Code (CTN), which establishes that the interpretation of rules related to tax exemptions must be literal.
“Such products [coils] were not specifically included in the list of exemptions at the time of the operations and, in this case, it is not permitted to extend the scope of the rule. An aneurysm clip is not a coil. They are completely different products, with the clip being applied externally, through an opening in the skull, while the coil is introduced via an arterial catheter and fills the interior of the aneurysm,” he argued.
However, Judge Edison Aurélio Corazza, who had requested to review the case, disagreed. The judge cited precedents from the STF (AI-AgR 360461) and STJ (AgInt in REsp 1,759,989) to argue that, when the literal interpretation is insufficient to express the true meaning of the tax rule, the applicator can make an interpretation.
“My entire interpretation, the ones who make my vote, are the STF and STJ, who say that I cannot read article 111 [of the CTN] in the sense of leading to interpretations that are contrary to the very purpose of the rule. The purpose of the rule is clear, because, in the year following the citation, these products [coils] were included in the agreement [149/2013],” stated Corazza.
The judge also noted that the legislation is unable to keep up with technology and that the cost of applying ICMS to medical products “is borne by the end user, who is the person in the ICU needing surgery.” The majority of judges agreed with the divergence, forming a score of 9X6 to dismiss the ICMS charge on platinum spirals.
For attorney Caio César Morato, from Rayes e Fagundes Advogados Associados, who represented CMS Produtos Médicos Ltda. in the coils case, the decision by the Superior Chamber of the TIT signals a trend. “I think the decision is important not only for this specific product, but it shows a trend toward recognizing the exemption in a less rigid manner. The TIT has been recognizing for some time the possibility of an interpretation more in line with the evolution of products, as in the case of stents,” he says.