The 1st Panel of STJ decided that the State Administration may charge ICMS on the interstate sale of electric power if the purchaser consumes power in the manufacture or commercialization of a product other than the energy itself. The appellant had signed an agreement with companies Ipiranga Petroquímica S/A and Copesul in Rio Grande do Sul. The company’s lawyers argued that the transactions involved the interstate sale of power to be used in an industrial process, so no ICMS should be imposed.

Reporting Justice Ari Pargendler understood that the only circumstance under which the appellant would not be subject to ICMS payment was if Ipiranga and Copesul resold electric power to other companies or if they industrialized the energy itself. His vote followed the position taken by the Supreme Court in Extraordinary Appeal No. 198,088, reported by Justice Ilmar Galvão. The Justice considered that the commercialization chain of electric power ended with companies Ipiranga and Copesul. Therefore, they were deemed final consumers, since they used energy to manufacture polypropylene and polyethylene, Justice Napoleão Nunes Maia Filho was defeated, since he considered that the electric power purchased by Ipiranga and Copesul should be considered input, and no ICMS should be imposed.

(REsp 1340323).