West Bengal AAR, December 24, 2025 : The West Bengal Authority for Advance Ruling (AAR) has held that amounts reimbursed towards fees paid to foreign patent attorneys for filing patents outside India qualify as a taxable import of legal services and attract Goods and Services Tax (GST) in India under the reverse charge mechanism.
The ruling was delivered by a Bench comprising Shafeeq S., Member (Central Tax), and Jaydip Kumar Chakrabarti, while deciding an application filed by Medtrainai Technologies Private Limited. The dispute related to patent filings undertaken in Japan, the United States, and the United Kingdom for an invention concerning smart manikins and augmented reality.
Medtrainai had engaged Seenergi IPR, an Indian intellectual property firm, to coordinate overseas patent filings. Seenergi IPR issued invoices in two parts. Part A covered reimbursement of fees paid to foreign patent attorneys and statutory charges abroad, while Part B related to Seenergi IPR’s own professional and handling charges. While the applicant accepted GST liability on Part B, it disputed tax on Part A, arguing that these were mere reimbursements and fell outside the scope of GST.
The applicant contended that the patent filing services were rendered and consumed outside India, generated no business or monetary benefit within India, and therefore did not constitute a “supply” under Section 7 of the Central Goods and Services Tax Act, 2017. It was also argued that Seenergi IPR acted as a pure agent and that the services should be treated as exempt legal services under Entry 45 of Notification No. 12/2017–Central Tax (Rate). According to the applicant, fees paid to foreign attorneys were governed by foreign tax laws and could not be subjected to GST in India.
Rejecting these submissions, the AAR examined the statutory framework, including provisions relating to supply, valuation, the pure agent concept, and the place of supply under the Integrated GST Act, 2017. The Authority noted that no contractual agreement existed establishing Seenergi IPR as a pure agent of the applicant, and the conditions prescribed under Rule 33 of the CGST Rules were not fulfilled. As a result, the reimbursement could not be excluded from the taxable value.
The Authority further observed that the services in question were, in substance, legal services rendered by foreign patent attorneys located outside India, with Medtrainai, based in India, as the recipient. Applying Section 13(2) of the IGST Act, the AAR held that the place of supply would be the location of the recipient, i.e., India. Consequently, the transaction amounted to an import of services, liable to GST under the reverse charge mechanism.
On the issue of exemption, the AAR clarified that the exemption under Entry 45 of Notification No. 12/2017 applies only to services provided by advocates or senior advocates as defined under the Advocates Act, 1961. Foreign patent attorneys practising in Japan, the US, or the UK do not fall within this definition, and therefore, their services are not eligible for exemption.
The Authority also dismissed the argument that overseas patent filing was not in the course or furtherance of business, describing it as untenable. It held that patent filing is intrinsically linked to the protection of intellectual property and is clearly undertaken in the course or furtherance of business.
Accordingly, the AAR ruled that GST at the rate of 18 percent is payable by the applicant under the reverse charge mechanism on both the reimbursement of foreign patent attorney fees (Part A) and Seenergi IPR’s handling charges (Part B). The ruling applies uniformly to patent filings undertaken in Japan, the United States, and the United Kingdom.
