The Supreme Court defines the scope of interest payments on refunds derived from annulled tax credits

Executive Summary:

• The Full Court of the Supreme Court of Justice of the Nation resolved the contradiction of criteria 158/2018, in which the scope of article 22-A, third paragraph, of the Federal Tax Code was analyzed in relation to the payment of interest when the return of amounts previously paid is requested due to a tax credit that was subsequently declared null.

• The Court specified that the payment of interest is only applicable when the judgment declaring the nullity of the tax credit expressly addresses the refund for payment of what is undue, since the refund of amounts paid and the payment of interest constitute different legal scenarios.

• The criterion delimits the effects of judgments regarding the nullity of tax credits and underlines the importance of taxpayers expressly requesting within the trial the return of the undue payment and the corresponding interest.

The matter originated from divergent criteria issued by the then First and Second Chambers of the High Court regarding whether the declaration of nullity of a previously paid tax credit generates, by itself, the right of the taxpayer to receive interest when requesting the return of the corresponding amounts.

One position held that the nullity of the tax credit automatically implied the right to the payment of interest, under the premise that the declaration of invalidity of the administrative act produces the full restitution of the legal effects derived from it, including the economic consequences of the undue payment.

In contrast, the opposing view held that the nullity of the tax credit is not sufficient to generate the payment of interest, insofar as the return of amounts paid and the recognition of the right to interest constitute distinct legal assumptions that require a specific ruling by the jurisdictional body.

In resolving the contradiction, the Full Court determined that the payment of interest is not applicable when the judgment declaring the nullity of a previously paid tax credit does not expressly address the taxpayer's right to a refund for undue payment.

According to the interpretation adopted, Article 22-A of the Federal Tax Code provides for the payment of interest only in those cases where there is an express jurisdictional pronouncement on the corresponding refund, since the updating of said assumption constitutes the starting point to determine the admissibility of the interest derived from the delay in the fulfillment of the refund.

In this regard, the Full Court specified that the existence of an undue payment and the obligation to cover interest correspond to different legal natures, so the declaration of nullity of the tax credit does not automatically generate the obligation of the tax authority to cover interest if the jurisdictional body did not expressly rule on the return of the amounts paid.

It was also emphasized that it is the responsibility of taxpayers to expressly request in the respective trial the return of the amounts unduly paid, so that the jurisdictional body can rule on said right and, if applicable, update the legal assumptions that allow the payment of interest.

The resolution has practical relevance in tax litigation, as it delimits the effects of judgments that declare the nullity of previously paid tax credits and emphasizes the need to properly formulate claims related to the return of undue payments within the jurisdictional process.

In this context, the Supreme Court's decision highlights that the declaration of nullity of the tax credit does not necessarily imply the full restitution of the amounts paid with the automatic recognition of interest, particularly when the judgment is limited to declaring the invalidity of the administrative act without expressly ruling on the refund for undue payment.

Consequently, the precedent suggests the advisability of carefully analyzing the claims made within the contentious administrative trial or the corresponding means of defense, in order to determine whether it is appropriate to expressly request the recognition of the right to the return of the undue payment and, where applicable, the accessories that may derive from said restitution.

Likewise, the criterion confirms that the appropriateness of interest payments will depend on the case's classification under the specific scenarios provided for in Article 22-A of the Federal Tax Code, which reinforces the importance of properly structuring the procedural strategy in those matters in which previously paid tax credits are disputed.