GST Payable Under RCM on Foreign Patent Filing Expenses: AAR Clarifies

The present applicant, dated August 14, 2025, has been filed by a company named Medtrainai Technologies Private Limited, before the West Bengal (WB) Authority for Advance Ruling (AAR), Goods and Services Tax (GST) 14 Beliaghata Road, Kolkata 700015.

The applicant is located at 15U, Telipara Lane, Dhakuria, Kolkata-700031. Mr Nilabhra Banerjee was the director of the applicant company, who wanted to file a patent in Japan.

Mr Nilabhra Banerjee, who is a Director of the company, wanted to file a patent in Japan (and later also in the USA and the UK). For this work, the company appointed Seenergi IPR, an Indian firm, to handle the patent filing. Seenergi IPR completed the Japan patent filing work and then issued an invoice, which the company has already fully paid. However, Seenergi IPR did not charge GST in its invoice. Instead, Seenergi IPR told the company to pay GST under the Reverse Charge Mechanism (RCM).

The company’s view is that it does not get any business benefit from the patent granted in Japan. The patent is only to protect the personal intellectual property rights of an Indian citizen (Mr Banerjee) outside India. The Japanese attorney’s work was done entirely in Japan and is governed by Japanese tax laws, not Indian law. Therefore, the company believes that GST should not be payable on Part A, which is only a reimbursement of foreign expenses.

So, the question is, “Is GST really payable under RCM on the reimbursement amount (Part A), when the service was provided in Japan and gives no benefit to the company in India?”

Questions Asked by Applicant:

The applicant, Medtrainai Technologies Private Limited, has asked the following questions seeking the present West Bengal AAR:

“Question 1: Whether the company needs to pay GST towards reimbursement of expenses Japanese patent attorney has done towards filing a patent in Japanese patent office. The company is filing the patent in favour of Nilanhra Banerjee, one of the directors. The company is not planning to do business in Japan.

Question 2: Same question remains for any other patent office on foreign soil as the company has submitted patents in USA and UK.”

Answers Given by WB AAR:

The West Bengal Authority for Advance Ruling has given the following answers to the questions asked by the applicant:

Answer 1: Yes, as per Entry no. 2 of the Notification No. 13 – Central Tax (Rate) dated June 28, 2017, tax is liable to be paid on a reverse charge basis. Accordingly, the company is required to pay GST towards reimbursement of expenses a Japanese patent attorney has incurred towards filing a patent in the Japanese Patent Office. The company is filing the patent in favour of Nilanhra Banerjee, one of the directors. The company is not planning to do business in Japan.

Answer 2: The answer here is also in “Yes” as the same situations fall under Entry no. 2 of the Notification No. 13 – Central Tax (Rate) Dated June 28, 2017.