In re Medtrainai Technologies Private Limited (GST AAR West Bengal)
The Authority for Advance Ruling, West Bengal examined whether GST is payable on amounts paid by an Indian company towards expenses of foreign patent attorneys in Japan, the USA, and the UK for filing patent applications in those jurisdictions. The applicant had engaged an Indian entity, Seenergi IPR, to coordinate patent filings. Seenergi IPR issued invoices comprising two components: one for its own handling fees and another described as reimbursement of foreign patent attorney charges. While the applicant accepted GST liability on Seenergi IPR’s fees, it disputed GST applicability on the reimbursed foreign attorney expenses, contending that the transaction occurred outside India, conferred no business benefit in India, and constituted a mere reimbursement rather than consideration for a supply.
The Authority analysed the nature of “reimbursement” and noted that reimbursement, in common parlance, signifies repayment of an amount already incurred on behalf of another and is not consideration for a supply. However, on examining the facts, it found that Seenergi IPR did not act as a “pure agent” under Rule 33 of the CGST Rules, 2017. No contractual agreement establishing a pure agent relationship was produced, and the applicant had paid amounts in advance rather than reimbursing expenses incurred by Seenergi IPR. Further, documents issued by foreign patent offices and attorneys were in the applicant’s name, with no indication that Seenergi IPR held any agency status in those transactions.
