Hi Thalos,
Yes,tax can be levied on projects. Let's say I am constructing a building for commercial purposes/residential building. And Construction is classified as service so service tax is applicable on its construction.
Now, If I am constructing it for one of my customer (MTO) then I have to mention it (taxes and duties) in my SO under 'Condition Types'. And if I am ordering a vendor to construct it for my company then I will raise a PO and mention it as 'Condition types' under conditions tab of PO.
So, the tax component is chargeable to project but it flows into project passing through SD or MM or both.
Regards
Saurabh