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TMI BlogClarification on place of supply of data hosting services provided by service providers located in India to cloud computing service providers located outside IndiaX X X X Extracts X X X X X X X X Extracts X X X X ..... in case of data hosting services provided by service providers located in India to cloud computing service providers located outside India. 2. Issue : 2.1 It has been represented that some field formations are of the view that the place of supply of data hosting services provided by the service providers located in India to cloud computing service providers located outside India is the location of data hosting service provider in India and therefore, the benefit of export of services is not available on such supply of data hosting services. 2.2 Thus, clarification has been sought in respect of the following issues- (i) Whether data hosting service provider qualifies as 'Intermediary' between the cloud computing service provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o arranges or facilitates the main supply of goods or services or both or securities and has not involved himself in the main supply on his own account is considered as 'intermediary'. Persons who supply goods or services, or both on their own account are not covered in the definition of "intermediary". 3.1.2 The cloud computing service providers generally enter into contract with data hosting service providers to use their data centres for hosting cloud computing services. Data hosting service provider either owns premises for data centre or operates data centre on leased premises, procures infrastructure and human resource, handles operations like infrastructure monitoring, IT management and equipment maintenance, etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng as a broker or agent for facilitating supply of service between cloud computing service providers and their end users/consumers. 3.1.4 Accordingly, it is clarified that in such a scenario, the services provided by data hosting service provider to its overseas cloud computing service providers cannot be considered as intermediary services and hence, the place of supply of the same cannot be determined as per section 13(8)(b) of IGST Act. 3.2 the data hosting services are provided in relation to goods "made available" by recipient of services to service provider for supply of such services and whether the place of supply of the same is to be determined as per section 13(3)(a) of the IGST Act, 2017. 3.2.1 Section 13(3)(a) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputing service providers cannot be considered to own the said infrastructure and make the same physically available to the data hosting service provider for supply of the said services 3.2.3 In view of above, it is clarified that data hosting services provided by data hosting service provider to the said cloud computing service providers cannot be considered in relation to the goods "made available" by the said cloud computing service providers to the data hosting service provider in India and hence, the place of supply of the same cannot be determined under section 13(3)(a) of the IGST Act. 3.2.4 There may be some cases where some of the hardware required for data hosting service is provided by the recipient of the service, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, backup generators, ventilation and cooling equipment, network connectivity, fire suppression systems, security, human resource, etc.; handle operations like server monitoring, IT management and equipment maintenance, including repairs and replacements of the same, for providing data hosting services to their clients. 3.3.3 Thus, it is observed that data hosting services are not passive supply of a service directly in respect of immovable property but are regarding supply of a comprehensive service related to data hosting which involves the supply of various services by the data hosting service provider like operating data centre, ensuring uninterrupted power supplies, backup generators, network connectivity, backup facility, firewall s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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