GST Payable On Reimbursed Foreign Patent Attorney Fees For Overseas Patent Filings: West Bengal AAR

The West Bengal Authority for Advance Ruling (AAR) has clarified that reimbursement of fees paid to foreign patent attorneys for overseas patent filings constitutes a taxable 'import of legal services' and attracts GST in India.A coram comprising Shafeeq S, Joint Commissioner (Member- Central Tax) and Jaydip Kumar Chakrabarti was examining a dispute arising from patent filings made in Japan, the United States, and the United Kingdom through foreign attorneys, facilitated by an Indian intellectual property firm.The applicant, Medtrainai Technologies Private Limited, had engaged Seenergi IPR, an Indian intellectual property firm, to handle patent filings abroad for an invention relating to smart manikins and augmented reality. The patents were filed in favour of one of the applicant's directors. Seenergi IPR raised invoices in two parts, Part A covering reimbursement of foreign attorney and government charges, and Part B covering its own handling and professional fees, and advised the applicant to discharge GST under the Reverse Charge Mechanism.While the applicant accepted GST liability on Seenergi IPR's handling charges, it disputed tax on the reimbursed foreign attorney fees. It argued that the services were consumed overseas, did not generate monetary benefit in India, and therefore fell outside the scope of GST. It also claimed that Seenergi IPR acted merely as a pure agent and that the services should qualify for exemption as legal services.In examining the matter, the AAR analysed the definition of “supply” under Section 7 of the CGST Act, the “pure agent” framework under Rule 33 of the CGST Rules, and the place of supply provisions under Section 13 of the IGST Act. THe Bench also considered the relevant exemption and reverse charge notifications, along with the definition of an “advocate” under the Advocates Act, 1961.Rejecting these arguments, the AAR termed the claim that overseas patent filings were outside the GST net as a “dubious” one. It held that, in the absence of any contractual agreement establishing Seenergi IPR as a pure agent, the reimbursement could not be excluded from the taxable value. The Authority further ruled that services rendered by Japanese, US, and UK patent attorneys amounted to an import of legal services, with the place of supply being India since the recipient was located in India.The authority emphasised that patent filing is integrally connected to business activity, observing that:“…. the act of filing a patent is to protect their intellectual property in the respective jurisdiction, which, in our view, is very much in the course or furtherance of the applicant 's business.”On the question of exemption, the AAR aligned its analysis with Entry 45 of Notification No. 12/2017–Central Tax (Rate) and clarified that foreign patent attorneys do not qualify as “Advocates” or “Senior Advocates” under the Advocates Act, 1961. As such, legal services provided by Japanese and other foreign attorneys were not eligible for exemption. The authority also held that these services were rendered in the course or furtherance of the foreign attorneys' business and therefore constituted a taxable supply.Accordingly, the AAR ruled that GST at 18% was payable by the applicant on both Part A (foreign attorney fees) and Part B (Seenergi IPR's handling charges) on a reverse charge basis. Case Title: MedTrainai Technologies Case Number: WBAAR 12 of 2025-26 For Applicant: Mr. Nilabhra Banerjee, Director Click Here To Read/Download AAR order.

GST Payable On Reimbursed Foreign Patent Attorney Fees For Overseas Patent Filings: West Bengal AAR

Parul Bose

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