The Superior Court of Justice (STJ) judged through the First Section Special Appeal No. 1.060.210 - SC (2008/0110109-8), which dealt with the judicial dispute between the City of   Tubarão (SC) and a financial company in respect of the levy of the Service Tax (ISS) on lease-purchase transactions.

In its decision, the First Panel of the STJ decided in favor of the levy of the tax; that the tax authority in the tax relationship, during the validity of Decree Law No. 406 of 1968 was the Municipality of the provider’s establishment, but as from the entry into force of Complementary Law No. 116/03, the tax authority in the tax relationship changed to the tax authority of the location where there is a proven economic or professional unity of the financial institution with enough decision powers for granting and approving the financing –  the center of the lease-purchase transaction and the taxable event of that tax.

For the Municipality of Tubarão, the decision brings severe financial consequences, since by virtue of the former understanding on the definition of the municipality creditor of the ISS in lease-purchase transactions, the municipality received in the past voluntary payments and payments from tax foreclosure proceedings of several debtor companies.

For this reason the Municipality of Tubarão, requested through a motion for clarification an injunction to stop any legal measures of settlement, blocking or refund of sums paid by way of ISS being taken on the basis of the appealed decision, until judgment of the Motion for Clarification by the First Section.

The referred injunction was granted by a monocratic decision of the Reporting Justice.