I have received my credit card bill and can see my Paypal transaction reflected.

Question: Can I tell my bank that I do not wish to pay for that Paypal transaction because I did not get my server from the hosting provider ?

**I have already filed a claim within my Paypal account to recover the money I paid but I am not confident they can recover the money from the hosting provider.

:( :(

If you do that, your PayPal account will most likely be restricted and you are in a minus-balance with them. PayPal will try to get the money back from you via your bank account or credit card.

You can only recover your money via the claim you´ve already filled, because if you chargeback it will always go to your account and you will owe the money to PayPal, not the one of the seller (the hosting provider).

PayPal's buyer complaint policy does not cover services (see http://www.paypal.com/cgi-bin/webscr?cmd=p/gen/ua/policy_buyer_complaint-outside), so I believe you will need to pursue a chargeback. As long as you ensure that you cancel your buyer complaint first, it doesn't look like you'll have a problem. To be sure, you should contact PayPal.

From URL above:
Relationship between Buyer Complaint Policy and Credit Card Chargeback Rights. If you used a credit card to fund a purchase of goods or services through PayPal, you may have chargeback rights granted by your credit card issuer. Credit card chargebacks, if they apply, can be filed more than 30 days after the transaction, are not limited to funds in the seller’s balance, and cover cases where the goods are not as described by the seller as well as cases of non-delivery.

...

PayPal encourages all buyer purchase disputes that cannot be resolved directly with the seller to be filed and resolved through the Buyer Complaint or PayPal Buyer Protection processes. PayPal reserves the right to terminate or limit account access privileges of buyers who misuse the credit card chargeback process to get their money back and keep the goods, or to recover payment twice for the same dispute, or to file multiple chargebacks without attempting to contact the seller or make use of the Buyer Complaint process. PayPal reserves the right to contest credit card chargebacks, in accordance with the rules of the applicable card issuer or card association.