The West Bengal Authority for Advance Ruling (AAR) has ruled that amounts paid towards foreign patent filing services, including sums described as reimbursement of overseas patent attorney fees, attracts GST under the reverse charge mechanism (RCM), while clarifying that such payments constitute import of legal services taxable under the GST law.

The AAR clarified that the applicant, a business entity in India, is the direct recipient of legal services from patent attorneys located outside India, and hence, such transaction constitutes an “import of services” under the GST Act. The AAR explained that the place of supply for such services is the location of the recipient (India), making it a taxable event within the jurisdiction of Indian GST law.

The service is not exempt, as the exemption for legal services under the relevant notification is restricted to advocates practicing under Indian law and does not cover foreign attorneys. Consequently, the supply is taxable, and as per Section 9(3) of the CGST Act read with Notification No. 13/2017-Central Tax (Rate), the recipient (the applicant) is liable to pay GST on a reverse charge basis, added the AAR.

The applicant, MedTrainAI Technologies Private Limited, had engaged an Indian IPR firm, Seenergi IPR, for filing patent applications in Japan, the USA, and the UK for an airway management training system. Seenergi IPR raised an invoice dated January 21, 2025, comprising two components—Part A, being reimbursement of fees paid to foreign patent attorneys, and Part B, being Seenergi IPR’s own professional charges.

While the applicant accepted GST liability on Part B, it disputed taxability on Part A, contending that the amount was a pure reimbursement incurred abroad, that no benefit accrued in India, and that patent filing amounted to exempt legal services.

While examining the questions, the Authority comprising Shafeeq S. (Joint Commissioner, CGST & CX) and Jaydip Kumar Chakrabarti (Senior Joint Commissioner, SGST) held that the conditions of a “pure agent” under Rule 33 of the CGST Rules were not satisfied, as there was no contractual agreement establishing Seenergi IPR as a pure agent and the payments were made in advance by the applicant. The Authority further held that the services were in fact rendered by foreign patent attorneys, and therefore amounted to import of legal services received by the applicant in India.

The Authority rejected the plea of exemption under Notification No. 12/2017–Central Tax (Rate), clarifying that the exemption for legal services applies only to services provided by advocates enrolled under the Advocates Act, 1961, and does not extend to foreign lawyers. Applying Section 13 of the IGST Act, the place of supply was held to be the location of the recipient in India, making the transaction taxable. Consequently, GST was held payable under RCM in terms of Notification No. 13/2017–Central Tax (Rate).

The Authority found that the payment made by the applicant was an advance payment to Seenergi IPR for the expenses, not a reimbursement of an amount already spent by Seenergi IPR. Therefore, it could not be classified as a reimbursement in the true sense.

At the same time, the Authority pointed out that the service received by the applicant is a legal service falling under SAC 998213 (Legal documentation and certification services concerning patents, copyrights and other intellectual property rights). As per Section 13(2) of the IGST Act, 2017, since the location of the service supplier is outside India and the recipient is in India, the place of supply is the location of the recipient, which is West Bengal.

Accordingly, the Authority concluded that GST is payable on the reimbursement of foreign patent attorney expenses, both for Japan and similarly for patents filed in the USA and the UK, under the reverse charge mechanism.