Oil Sector: STJ Decision Reaffirms the Right to ICMS Credits on Strategic Inputs

The 2nd Panel of the Superior Court of Justice (STJ) confirmed the understanding that the use of ICMS credits on the acquisition of drilling fluids employed in oil extraction is lawful. The decision reinforces the application of the criteria of essentiality and relevance in the characterization of inputs, upholding the Court’s already consolidated case law.

The controversy began with the filing of an annulment action by Petrobras against a tax assessment issued by the State of Rio de Janeiro, amounting to R$ 144 million. The assessment challenged ICMS credits used by the company to offset the tax levied on oil sales.

These credits were related to the acquisition of drilling fluids used in the oil extraction process. Upon reviewing the case, the Court of Justice of the State of Rio de Janeiro unanimously ruled in favor of the taxpayer, following the reporting justice, Minister Francisco Falcão. The decision was grounded on expert evidence demonstrating the indispensable nature of these inputs for carrying out oil exploration activities.

As a result, the right to claim ICMS credits was preserved, in line with the precedent established by the 1st Section in EAREsp 1775781/SP.

During the proceedings, the state entity raised arguments concerning the fiscal impact of this interpretation. It argued that, in recent years, companies in the oil and gas sector have expanded the range of items classified as inputs for credit purposes, which, according to its claims, has significantly affected tax revenues. From this perspective, such expansion would be associated with substantial revenue losses, particularly in the context of the State’s ongoing fiscal recovery efforts.

Additionally, the existence of a possible divergence between the STJ and the Federal Supreme Court (STF) regarding the ICMS crediting regime was raised. When analyzing Theme 633, the STF reportedly indicated an interpretation linked to the so-called “physical credit” approach, conditioning the right to credits on the incorporation of the input into the final product. Despite these considerations, the STJ’s established understanding ultimately prevailed.

There was also a suggestion to revisit the precedent by the 1st Section; however, the majority of the 2nd Panel chose to maintain the current position, ensuring jurisprudential stability until a new deliberation is made by the competent body.

Final Considerations

The decision reaffirms the importance of assessing the essentiality and relevance of inputs in determining the right to ICMS credits, especially in sectors where the production process involves inputs that, although not physically incorporated into the final product, are indispensable to the production activity.

Text written and published by Giovanna Diniz and Camila Santos.