In my opinion service tax needs to be charged on services provided to the SEZ. SEZ can claim this amount by way of refund. According to notification no. Notification No.9/2009-Service Tax
"2. The exemption contained in this notification shall be subject to the following conditions, namely:-
(a) the person liable to pay service tax under sub-section (1) or sub-section (2) of section 68 of the said Finance Act shall pay service tax as applicable on the specified services provided to the developer or units of Special Economic Zone and used in relation to the authorised operations in the Special Economic Zone, and such person shall not be eligible to claim exemption for the specified services:
Provided that where the developer or units of Special Economic Zone and the person liable to pay service tax under sub-section (2) of section 68 for the said services are the same person, then in such cases exemption for the specified services shall be claimed by that person;
(b) the developer or units of Special Economic Zone shall claim the exemption by filing a claim for refund of service tax paid on specified services"