Brazilian judge absolves construction wholesaler partner in ICMS‑ST tax case

Judge José Emanuel da Silva e Sousa of the 3rd Mixed Court in Itaporanga (Paraíba) ruled that the financial‑investigation technique used to presume tax evasion is unsuitable for criminal proceedings. The method, which compares a company’s revenues and expenses to infer unregistered sales, was deemed invalid for firms subject to the ICMS‑ST substitution‑tax regime.

The judge found the prosecution’s evidence insufficient to prove that the partner of a construction‑materials wholesaler had suppressed ICMS taxes for 2012‑2014. He noted that the tax authority ignored loans amounting to R$ 781,000 and that the audit exceeded the legal 120‑day limit, lasting 126 days. Citing the principle of *in dubio pro reo*, the court acquitted the defendant.

The decision underscores that methodological discrepancies between the tax authority and the taxpayer do not, by themselves, constitute criminal intent. As the judge observed, “Trata-se de questão técnica e interpretativa, não de conduta criminosa.”