The Government of Odisha on January 09, 2024, issued a notification regarding the Co-Location Service Agreement and determination of the Place of Supply (POS) of Co-Location Service under GST.
"Co-location" is the service of hosting IT hardware in a Data Centre. Taking advantage of the infrastructure provided by Commercial Data Centres, the business entities/Organizations avail "Co-Location Services" from such Commercial Data Centers under a "Co-Location Service" Agreement.
It has come to the notice of the State Government that some commercial Data Centres located outside the State are supplying "Co-Location Services" to some State Government Departments/Corporations. In this scenario, the recipient of such Services is located within the State whereas the service providers are located outside the State. The Service providers are erroneously charging SGST/CGST instead of IGST. Due to the non-levy of IGST in these transactions, the State Government being the recipient State, is losing its share of IGST, whereas the State in which the Data Centers are located is receiving the SGST.
To obviate the above difficulty, it is advised to devise a service agreement in such a manner that there is no scope of confusion between the "Hosting and Information Technology (IT) Infrastructure Provisioning Services" with "Services of renting of immovable property". The service providers may accordingly be advised to charge IGST in their invoices raised against State Government Departments/Corporations/Business entities.
[Notification No. FIN-CT1-TAX-0051-2023-977]
