In my application I have to install Ghostscript in the server to run the application.
Does Google Compute Engine (IaaS), Amazon EC2, VMware, WindowsAzure etc., or anyone support software installation from user side.
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Yes. On IaaS you get full access to the computing platform (the infrastructure) and you can do pretty much whatever you want with it (ehm… legal aspects apply).
Basically, you get an API which allows you to manage virtual computing resources (Servers, Disk space, Firewalls, Load balancers,…).
Normally, the service is delivered as a web or console interface which allows you to spawn new resources and, in the case of virtual machines, get root access to them.
In many of such services, you are even able to upload your custom disk images and run the OS installed on them. This gives you the ability to customize things down to the kernel level.
The IaaS section on wikipedia may shed some more light on the argument.