       TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN


                                      NO. 03-10-00323-CV



                            Austin Engineering Co., Inc., Appellant

                                                 v.

  Susan Combs, Comptroller of Public Accounts of the State of Texas, and Greg Abbott,
                 Attorney General of the State of Texas, Appellees


    FROM THE DISTRICT COURT OF TRAVIS COUNTY, 201ST JUDICIAL DISTRICT
    NO. D-1-GN-07-000565, HONORABLE SUZANNE COVINGTON, JUDGE PRESIDING



                            MEMORANDUM OPINION


               In this suit to recover sales taxes paid under protest, appellant Austin Engineering

Co., Inc. (“Austin Engineering”) appeals from the trial court’s order denying its motion for summary

judgment and granting summary judgment in favor of appellees Susan Combs, Comptroller of Public

Accounts of the State of Texas, and Greg Abbott, Attorney General of the State of Texas

(collectively, “the Comptroller”). See Tex. Tax Code Ann. § 112.052 (West 2008); see also id.

§ 112.054 (West 2008). We affirm that portion of the trial court’s order denying Austin

Engineering’s motion for summary judgment, reverse that portion of the order granting summary

judgment in favor of the Comptroller, and remand for further proceedings.
                                            BACKGROUND

                Austin Engineering is a Texas corporation providing construction services to

businesses and governmental entities. The president of the company, Paul Keller, testified by

affidavit that Austin Engineering specializes in “utility and environmental construction of

underground utilities, drainage improvements, roads and highways, airports, pump stations, water

and wastewater treatment plants, and storm water filtration facilities.” In connection with these

construction and utility services, Austin Engineering, either directly or through subcontractors,

installs erosion prevention devices such as silt fences, tri-dikes, and inlet protectors on construction

sites. In his deposition testimony, Keller explained that silt fences consist of porous fabric attached

to wire fencing and metal “t-posts.” The silt fencing is buried underground in order to trap silt when

water flows through the fabric, protecting groundwater from contamination. Keller further stated

that tri-dikes are made of the same materials and used for the same general purpose as silt fences,

but are built in a triangular shape and used to reinforce areas with high water flow. Inlet protectors,

also made from the same materials as silt fences, are placed over stormwater inlets in order to

prevent silt from entering the culverts.1

                In 2006, the Comptroller conducted a sales and use tax audit of Austin Engineering

for the period from January 1, 2000 to December 31, 2003. This audit resulted in a tax assessment


       1
           Keller also testified that Austin Engineering’s erosion control measures include the
stacking of rocks into “rock berms” for the purpose of controlling water runoff. The Comptroller
has taken the position that the installation of rock berms, which are permanent in nature, represent
nontaxable new construction services. See Tex. Tax Code Ann. § 151.0101 (West 2008). Austin
Engineering and the Comptroller agree that silt fences, tri-dikes, and inlet protectors are temporary
in nature because they are either removed from the construction site or allowed to deteriorate after
the work is completed.

                                                   2
of $53,654, including interest and penalties. Austin Engineering paid the sales and use tax under

protest and then filed suit to recover the amounts paid, alleging that the Comptroller erroneously

assessed tax on erosion control measures that were either nontaxable or exempt from taxation. See

id. Austin Engineering also raised constitutional claims related to equal protection, equal and

uniform taxation, and interstate commerce, see U.S. Const. art. I, § 8, cl. 3; U.S. Const. amend. XIV;

Tex. Const. art. VIII, § 1, and sought a declaratory judgment that it did not owe the tax, penalties,

or interest paid under protest and that the Comptroller’s tax assessment was invalid because it

violated Austin Engineering’s constitutional rights, see Tex. Civ. Prac. & Rem. Code Ann.

§§ 37.001-.011 (West 2008). The parties filed cross-motions for summary judgment, and the trial

court issued an order granting summary judgment in favor of the Comptroller on all claims, finding

that Austin Engineering was not entitled to recover any of the tax, interest, or penalties paid under

protest. This appeal followed.


                                    STANDARD OF REVIEW

                Summary judgments are reviewed de novo. Valence Operating Co. v. Dorsett,

164 S.W.3d 656, 661 (Tex. 2005). When, as here, both parties move for summary judgment on the

same issues and the trial court grants one motion and denies the other, the appellate court considers

the summary-judgment evidence presented by both sides, determines all questions presented, and

if the reviewing court finds that the trial court erred, renders the judgment the trial court should have

rendered. Id.

                Austin Engineering’s arguments are based primarily on issues of statutory

construction. Statutes imposing a tax must be strictly construed against the taxing authority and

                                                   3
liberally construed in favor of the taxpayer, Upjohn Co. v. Rylander, 38 S.W.3d 600, 606

(Tex. App.—Austin 2000, pet. denied), while statutory exemptions from taxation are strictly

construed against the taxpayer, North Alamo Water Supply Corp. v. Willacy County Appraisal Dist.,

804 S.W.2d 894, 899 (Tex. 1991). Because the Comptroller is the agency charged with enforcing

the tax code, the Comptroller’s construction of the code is entitled to serious consideration, provided

it is reasonable and does not contradict the plain language of the statute. See Tarrant Appraisal Dist.

v. Moore, 845 S.W.2d 820, 823 (Tex. 1993).


                                           DISCUSSION

               Austin Engineering’s arguments on appeal can be summarized into three issues. First,

Austin Engineering takes the position that the trial court erred in granting summary judgment in

favor of the Comptroller because the erosion control transactions at issue were either nontaxable or

exempt from taxation. Second, Austin Engineering argues that the Comptroller’s tax assessments

violate the state and federal constitutions and are therefore invalid. Finally, Austin Engineering

asserts that it is entitled to declaratory relief and attorney’s fees under the Uniform Declaratory

Judgments Act (UDJA). See Tex. Civ. Prac. & Rem. Code Ann. §§ 37.001-.011.


Taxability of Erosion Control Transactions

               Austin Engineering presents four alternative arguments to support its position that

the Comptroller improperly assessed sales tax on the transactions at issue here. The first of these

arguments is that under the “essence-of-the-transaction” test, Austin Engineering is providing a

nontaxable erosion control service when it installs silt fencing, tri-dikes, and inlet protectors on



                                                  4
construction sites. See 7-Eleven, Inc. v. Combs, 311 S.W.3d 676, 688 (Tex. App.—Austin 2010, pet.

denied) (explaining that “essence-of-the-transaction” test is used to determine sales tax liability when

taxable and nontaxable elements are bundled together in single transaction); see also Tex. Tax Code

Ann. § 151.0101 (West 2008) (providing exhaustive list of taxable services). The Comptroller, on

the other hand, contends that the essence of the transaction at issue here is not a service, but the sale

or rental of tangible personal property in the form of silt fencing, tri-dikes, and inlet protectors. In

the absence of an applicable exemption, the sale or rental of tangible personal property is subject to

sales tax. See Tex. Tax Code Ann. §§ 151.005, .051, .054 (West 2008).

                Under the essence-of-the-transaction test, “[i]f the real object of a mixed transaction

is the purchase of equipment which is taxable, and the service element is incident to that purchase,

the entire transaction is taxable.” Rylander v. San Antonio SMSA Ltd. P’ship, 11 S.W.3d 484, 487

(Tex. App.—Austin 2000, no pet.). On the other hand, “if the essence of the transaction is the

purchase of a nontaxable service, which incidentally includes the purchase of some . . . equipment

that is taxable, the entire transaction is nontaxable.” Id.

                In Combs v. Chevron, Inc., 319 S.W.3d 836, 842-43 (Tex. App.—Austin 2010, pet.

denied), this Court applied the essence-of-the-transaction test to conclude that the installation of

temporary scaffolding on a construction site was the sale or lease of temporary personal

property—the scaffolding itself—rather than the provision of a nontaxable service. While the

contracts in question incorporated services such as the erection, oversight, and disassembly of the

scaffolding, this Court held that the essence of the transaction “was the rental of the scaffolding

itself, not the attendant services. Chevron’s underlying goal in executing the contracts was to



                                                   5
facilitate maintenance work at its refinery. It was scaffolding, not the services incidental to use of

scaffolding, that Chevron primarily wanted.” Id.

                As in Chevron, we must review the transactions at issue to determine the underlying

goal of Austin Engineering’s customers. The summary-judgment record includes copies of Austin

Engineering’s construction services contracts, which include a line item in the total construction

price for “Erosion Control Improvements,” with a lump sum charge for both labor and materials.2

In contracting for “Erosion Control Improvements,” Austin Engineering’s customers sought the

ultimate result of erosion control on the construction site. It is the erosion control devices

themselves, not any incidental services, that accomplish this result. Keller stated in his deposition

that once silt fences, tri-dikes, and inlet protectors are installed, these items serve their intended

purpose of erosion control without requiring any additional operation or action by Austin

Engineering or the erosion control subcontractor, absent the need for repairs or cleaning. Services

such as the digging of trenches for burying silt fencing, the installation of tri-dikes, or the cleaning

of inlet protectors would be useless to Austin Engineering’s customers without the ability to use the

erosion control devices for their intended purpose on the construction site. See id. (“Chevron would

(if possible) have gladly used the scaffolding without purchasing the attendant services. On the other

hand, the attendant services would have been useless to Chevron without the ability to use the

scaffolding to perform maintenance work.”).




       2
            According to the bid sheets and invoices in the summary-judgment record, Austin
Engineering charged for silt fences using a lump sum per linear foot of fencing installed, and charged
for inlet protectors and tri-dikes using a lump sum per item installed.

                                                   6
                Austin Engineering urges that its customers did not specify the type of erosion control

measures to be installed, but trusted Austin Engineering to provide the optimal combination of such

measures for each particular construction site. This contention does not necessarily lead to the

conclusion that the ultimate goal of Austin Engineering’s customers was to obtain consulting

services or advice as to the appropriate erosion control measures for each project, as any such advice

would be of little use to the customers if they did not also obtain the devices themselves.

                The Comptroller has consistently treated the installation of silt fencing as the sale or

rental of tangible personal property. See Tex. Comptroller of Pub. Accounts, STAR Document No.

200303807L (Mar. 28, 2003) (“The installation . . . of temporary silt fences to prevent erosion is

considered the rental of tangible personal property where [the seller] is required as part of the

contract to remove the silt fence at a later date. The total charge for the fence, including labor to

install, maintain, repair and take down the silt fence is taxable.”);3 see also Tex. Comptroller of Pub.

Accounts, Hearing No. 44,116, STAR Document No. 200407857H (July 26, 2004); Tex.

Comptroller of Pub. Accounts, STAR Document No. 200309150L (Sept. 18, 2003). These rulings

are entitled to deference. See Myers v. State, 169 S.W.3d 731, 734 (Tex. App.—Austin 2005, no

pet.) (“Construction of a statute by an administrative agency charged with its enforcement is entitled

to consideration as long as it is reasonable and does not conflict with the plain language of the

statute.”).




        3
        Presumably, contracts that do not require the seller to remove the silt fence at a later date
would be considered the sale, rather than the rental, of tangible personal property.

                                                   7
               Considering the nature of the transactions at issue here and the deference afforded to

the Comptroller’s interpretation of the tax code, we conclude that the essence of the transactions was

the sale or rental of tangible personal property in the form of silt fences, tri-dikes, and inlet

protectors, rather than the provision of an erosion control service. Thus, the transactions are subject

to sales tax, absent an applicable exemption. See Tex. Tax Code Ann. §§ 151.005, .051, .054

(West 2008).

               In three alternative arguments, Austin Engineering argues that even if the transactions

at issue are considered taxable as the sale or rental of tangible personal property, no sales tax was

due because the transactions qualify for exemptions. Specifically, Austin Engineering argues that

(1) the erosion control devices were exempt from taxation because they were provided or consumed

in connection with contracts to improve real property for the benefit of governmental entities, see

id. § 151.311 (West 2008), (2) the transactions were subject to an exemption for water-related

services and equipment, see id. § 151.355 (West 2008), and (3) those transactions involving the use

of subcontractors represent tax-exempt sales for resale, see id. § 151.302 (West 2008). We will

address each of these arguments in turn.


               1.      Exemption for Items Related to Tax-Exempt Contracts

               Items incorporated into real property of an exempt entity are exempt from taxation.

Id. § 151.311(a); see also id. § 151.309 (West 2008) (exempting governmental entities from sales

tax). In addition, tangible personal property that is necessary and essential for the performance of

a contract for an improvement to real property for an exempt entity is exempt from taxation if the

property in question is “completely consumed at the job site.” Id. § 151.311(b). Tangible personal

                                                  8
property is considered to be completely consumed at the job site “if after being used once for its

intended purpose it is used up or destroyed.” Id. § 151.311(d). For purposes of section 151.311,

exempt contracts include contracts with a nonexempt entity to improve real property for the primary

use and benefit of a governmental entity. See 34 Tex. Admin. Code § 3.291(a)(5) (2010) (Tex.

Comptroller of Pub. Accounts, Contractors). Exempt contracts also include contracts with a private

party to improve real property by building public infrastructure improvements that “are dedicated

to and will be accepted by a governmental entity.” See id. § 3.291(d).

               On appeal, the Comptroller does not disagree with Austin Engineering’s assertion that

the majority of its contracts represent exempt contracts to improve real property for the primary use

and benefit of a governmental entity or development contracts to build public infrastructure

improvements that are dedicated to and will be accepted by a governmental entity.4 The Comptroller

argues, however, that in order to qualify for the exempt-entity exemption under section 151.311,

tangible personal property must be incorporated into real property, see Tex. Tax Code Ann.

§ 151.311(a), or completely consumed at the job site, see id. § 151.311(b). According to the

Comptroller, the silt fences and other erosion control devices at issue here are neither incorporated




       4
          During his deposition, Keller stated that 99 percent of Austin Engineering’s work was
either performed directly for a municipality or on real property that was later owned by a
municipality. Keller explained that the bulk of the work involved infrastructure projects for
subdivision developers, including streets, roads, waterlines, sewer lines, and storm drain facilities.
The record also contains a number of sales and use tax exemption certificates provided to the
Comptroller by Austin Engineering, reflecting that erosion control devices were purchased for use
in contracts for improvements to be dedicated to and accepted by exempt entities. The majority of
these exemption certificates are signed by non-exempt developers who contracted with Austin
Engineering for the provision of the erosion control services in connection with public infrastructure
improvements.

                                                  9
into real property nor completely consumed at the job site and therefore do not qualify for exemption

under section 151.311.

                We agree that the silt fences, tri-dikes, and inlet protectors are not incorporated into

real property as permanent improvements, as the summary-judgment evidence reflects that these

items are either removed from the job site or allowed to deteriorate after completion of construction.

See 34 Tex. Admin. Code § 3.291(a)(7) (characterizing incorporated materials as property that

becomes part of permanent improvements); see also id. § 3.347 (2010) (Tex. Comptroller of Pub.

Accounts, Improvements to Realty). Keller testified in his deposition that silt fences, tri-dikes, and

inlet protectors are temporary installations. He further explained that Austin Engineering either

removes the devices after completion of the project or allows them to deteriorate, depending on the

preferences of the customer. Keller stated that if the devices are not removed, they “don’t last very

long,” and “just naturally deteriorate.”

                With respect to the exemption for items completely consumed at the job site in the

performance of an exempt contract, the Comptroller contends that the silt fences are not completely

consumed because they may ultimately be removed and reused after construction is complete. This

contention conflicts with the summary-judgment evidence provided by Austin Engineering. In

Keller’s deposition, he testified that the materials used to construct silt fences cannot be reused after

a project is completed because the “Highway Department insists on using new fabric, new T posts,

new—new stuff” for each project. Keller also stated that while t-posts could be reused “[i]f you can

get them out of the ground,” the silt fencing “fabric is hard to reuse. It’s . . . in a mess by the time

you reuse it.” Keller further testified that tri-dikes and inlet protectors cannot be reused. In an



                                                   10
affidavit produced as summary-judgment evidence, Keller averred that when silt fence materials are

“pulled from the ground, they are no longer usable because the filter fabric has disintegrated, the wire

mesh has been stretched apart, and the t-posts have often rusted or bent in removing them from the

ground, rendering them useless without substantial reconstruction or rehabilitation.” Keller further

stated that inlet protectors and tri-dikes “have similar problems that generally prevent them from

being reused.”

                 Mark Mauldin, an environmental conservation program manager for the City of

Austin, also provided an affidavit stating that “[o]nce a silt fence or inlet protection is used on one

project, it is not generally usable on subsequent projects” because such devices are required to be

free of sediment at the commencement of the project. Finally, Austin Engineering presented the

affidavit of David Cheverere, the president of an erosion control subcontractor used by Austin

Engineering.5 In his affidavit, Cheverere states:


        Once the filter fabric, wire fences, and other components of the erosion control
        measures have been used once, they cannot be reused. They deteriorate over time.
        Only the T-posts can sometimes be reused, if it is possible to remove them from the
        ground without damage. However, the environmental laws and regulations generally
        require us to use all new materials when constructing erosion control devices.




       5
           While Cheverere’s affidavit does not appear in the clerk’s record, Austin Engineering
represents that it was provided to the trial court as an attachment to its motion for summary
judgment. Both Austin Engineering and the Comptroller reference the affidavit in their briefs and
summary-judgment pleadings, and Austin Engineering has included a copy of the affidavit in the
appendix to its brief. Because the parties appear to agree that Cheverere’s affidavit was considered
by the trial court and should have been included in the record, we will consider it for purposes of
appeal.

                                                  11
At a minimum, this evidence creates a fact issue as to whether the silt fences, tri-dikes, and inlet

protectors may be reused after completion of a project or are completely consumed over the course

of the project.

                  If the silt fences, tri-dikes, and inlet protectors cannot be reused, they may qualify for

the exemption for consumable supplies, assuming they were required by a qualifying exempt

contract.6 The Comptroller considers consumable supplies subject to exemption under section

151.311(b) to include items such as nonreuseable concrete forms, nonreusable drop cloths, barricade

tape, survey stakes and flags, tree markers, disposable rags, electricity, and sandpaper. See 34 Tex.

Admin. Code § 3.291(a)(2); Tex. Comptroller of Pub. Accounts, STAR Document No. 200005321L

(May 16, 2000) (providing partial list of qualifying consumable supplies); Tex. Comptroller of Pub.

Accounts, STAR Document No. 9703345L (Mar. 26, 1997) (same). In the past, the Comptroller has

taken the position that a silt fence cannot be considered a consumable supply because it is used

throughout the duration of a single construction project. See Tex. Comptroller of Pub. Accounts,

STAR Document No. 200303931L (Mar. 28, 2003) (“Silt fencing is not used up or destroyed after

one use. It is used repeatedly as the construction progresses. It may be ‘used up’ at the end of the

entire job, but not after one use, so it does not qualify for exemption as a consumable supply.”). The

Comptroller has not taken this position on appeal here. Furthermore, we disagree with the


        6
         Any transactions in which Austin Engineering provided its customers with reusable erosion
control devices would be considered the rental of tangible personal property and would not be
subject to the exemption for consumable supplies. See Tex. Tax Code Ann. § 151.311(d) (West
2008) (“Tangible personal property that is rented or leased for use in the performance of the contract
cannot be completely consumed for purposes of this section.”). The provision of nonreusable
erosion control devices, on the other hand, would be considered the sale of tangible personal property
and therefore could be subject to the exemption for consumable supplies.

                                                     12
contention that silt fencing is not used up after “one use.” If the “use” in question spans the length

of the construction project, the fencing may in fact be used up at the end of one use. In that regard,

nonreusable silt fences and other erosion control devices are similar to items such as barricade tape,

tree flags, and nonreusable concrete form work. These items, while not necessarily “used up”

instantly in the same manner as gas or electricity, are used up in a single use over the course of the

project.

               Austin Engineering has the burden of establishing its entitlement to an exemption.

See North Alamo Water Supply Corp., 804 S.W.2d at 899. Under the circumstances, we hold that

Austin Engineering has provided sufficient evidence to create a fact question as to whether the silt

fences and other erosion control devices at issue here are subject to the exemption for

consumable supplies necessary to the performance of an exempt contract. See Tex. Tax Code Ann.

§ 151.311(b). Accordingly, we reverse the trial court’s order granting summary judgment in favor

of the Comptroller.

               Austin Engineering requests that this Court render summary judgment in its favor,

urging that the transactions at issue are exempt from taxation as a matter of law. See Dorsett,

164 S.W.3d at 661 (stating that in reviewing cross-motions for summary judgment, appellate court

must review summary-judgment evidence, determine all questions presented, and render judgment

trial court should have rendered). Austin Engineering’s evidence regarding the reuse of erosion

control devices consists solely of statements made in affidavits and deposition testimony, many of

which are qualified in a manner that suggests further development of the facts would be necessary

to determine whether the transactions at issue here qualify for the exemption for consumable supplies



                                                 13
required in the performance of an exempt contract. Keller, for instance, testified in his deposition

that silt fence fabric is “hard to reuse,” and stated in his affidavit that inlet protectors and tri-dikes

have problems that “generally” prevent reuse. Similarly, Mauldin’s affidavit states that used silt

fences or inlet protectors are “generally” not reusable, while Cheverere averred that t-posts can

“sometimes” be reused if it is possible to remove them from the ground. While these statements are

sufficient to raise a fact issue, we cannot say that Austin Engineering has carried its burden of

establishing as a matter of law that it is entitled to the exemption for consumable supplies required

in the performance of an exempt contract. We will therefore proceed to review Austin Engineering’s

two remaining exemption arguments in order to determine whether either of those exemptions have

been established as a matter of law.


                2.      Exemption for Water-Related Services and Equipment

                Austin Engineering contends that its provision of silt fences and other erosion control

devices is subject to an exemption for “equipment, services, or supplies used solely to construct or

operate a water or wastewater system certified by the Texas Commission on Environmental Quality

as a regional system.” See Tex. Tax Code Ann. § 151.355(5). Austin Engineering claims that some

of its projects during the audit period pertained to water or wastewater systems certified by the Texas

Commission on Environmental Quality (TCEQ) as regional systems. While Keller testified in his

deposition that Austin Engineering had performed work for certified water systems at some point

during the audit period, he did not testify that any particular erosion control measures were “used

solely to construct or operate” water system projects. Because Austin Engineering has not provided

any evidence to suggest that the Comptroller assessed sales tax on the provision of silt fences, tri-

                                                   14
dikes, or inlet protectors “used solely to construct or operate” certified water systems, Austin

Engineering is not entitled to summary judgment on this issue.7

               Austin Engineering also argues that its provision of erosion control devices is exempt

from sales tax under tax code section 151.338, which exempts “services involved in the repair,

remodeling, maintenance, or restoration of tangible personal property” if such services are required

by law “in order to protect the environment or to conserve energy.” Id. § 151.338 (West 2008). As

previously discussed, the essence of the transaction at issue here is the sale or rental of tangible

personal property, not the attendant services. For this reason, Austin Engineering’s provision of

erosion control devices is not subject to the exemption for environmental services required by law.

See id.


               3.      Sales for Resale

               In its final exemption argument, Austin Engineering asserts that it is entitled to the

sale-for-resale exemption.    This argument is limited to those transactions in which Austin

Engineering did not provide erosion control devices to its customers directly, but obtained the

devices from erosion control subcontractors on behalf of its customers. Austin Engineering takes

the position that these transactions with its subcontractors represent tax-exempt sales for resale. See

id. § 151.302(a) (“The sale for resale of a taxable item is exempted from the taxes imposed by this




          7
         Section 151.355 also exempts equipment “used solely” to reduce or eliminate water use
or for brush control designed to enhance the availability of water. See Tex. Tax Code Ann.
§ 151.355(1), (3) (West 2008). Keller confirmed in his deposition that the erosion control devices
provided by Austin Engineering are not used solely to reduce or eliminate water use, nor are they
used solely for brush control designed to enhance water availability.

                                                  15
chapter.”); see also Sharp v. Clearview Cable TV, Inc., 960 S.W.2d 424, 426 (Tex. App.—Austin

1998, pet. denied) (explaining that purpose of sale-for-resale exemption is prevention of

double taxation).

                 Assuming without deciding that Austin Engineering’s purchase of erosion control

devices from subcontractors could be exempt from tax as a sale for resale, Austin Engineering would

not be entitled to claim the exemption because it is not the party required to collect the tax. The

subcontractor, as the party collecting the sales tax, could attempt to claim the exemption by acquiring

a resale certificate from Austin Engineering reflecting that the property was acquired for the purpose

of being resold. See Tex. Tax Code Ann. § 151.054(b) (West 2008) (“A sale is exempt if the seller

received in good faith from a purchaser . . . a resale certificate stating that the tangible personal

property . . . is acquired for the purpose of selling, leasing, or renting it in the regular course of

business . . . .”); see also id. § 151.054(e) (providing that seller may not claim deductions from audit

results based on sale-for-resale exemption unless resale certificates are in seller’s possession and

provided to Comptroller within 60 days of request); 34 Tex. Admin. Code § 3.285 (2010) (Tex.

Comptroller of Pub. Accounts, Resale Certificate; Sales for Resale). Austin Engineering, however,

cannot claim the sale-for-resale exemption in connection with its own sales tax audit, as it is

claiming to be the purchaser, rather than the seller, in a tax-exempt sale-for-resale transaction. As

a result, the trial court did not err in denying Austin Engineering’s motion for summary judgment

on this issue.

                 Having concluded that Austin Engineering has not proven any of its claims of

exemption as a matter of law, we affirm that portion of the trial court’s order denying Austin



                                                  16
Engineering’s motion for summary judgment. Because Austin Engineering has raised a fact question

on the issue of whether its provision of erosion control devices is subject to the exemption for

consumable supplies used in exempt contracts, we reverse the portion of the trial court’s order

granting summary judgment in favor of the Comptroller, and remand for further proceedings.


Constitutional Claims

               In its second issue on appeal, Austin Engineering argues that the Comptroller’s

imposition of sales tax on the transactions at issue here violates its constitutional rights to equal

protection and equal and uniform taxation. See U.S. Const. amend. XIV, § 1; Tex. Const. art. VIII,

§ 1. This argument is primarily based on Austin Engineering’s contention that the Comptroller has

treated it differently from other taxpayers providing construction services on property owned or

controlled by exempt entities. We have previously determined that a fact question exists as to

whether Austin Engineering is entitled to an exemption for supplies consumed in the course of an

exempt contract. We therefore need not address Austin Engineering’s constitutional claims, as

those claims may subsequently be rendered moot by proceedings in the trial court. See Tex. R. App.

P. 47.1.


UDJA Claims

               In its third issue on appeal, Austin Engineering argues that it is entitled to a

declaratory judgment that no tax is due and that the Comptroller’s tax assessment violates its

constitutional rights. Austin Engineering further requests an award of attorney’s fees under the

UDJA. See Tex. Civ. Prac. & Rem. Code Ann. § 37.009 (providing that trial court may award

“necessary attorney’s fees as are equitable and just” in declaratory-judgment action under UDJA).

                                                 17
The Comptroller responds that Austin Engineering’s UDJA claim is redundant to the remedy

provided under the tax code and that a UDJA claim cannot be used solely as a vehicle to obtain

attorney’s fees. See Texas State Bd. of Plumbing Exam’rs v. Associated Plumbing-Heating-Cooling

Contractors of Tex., Inc., 31 S.W.3d 750, 753 (Tex. App.—Austin 2000, pet. dism’d by agr.).

                When a statute provides an avenue for attacking an agency order, a declaratory-

judgment action will not lie to provide redundant remedies. See Aaron Rents, Inc. v. Travis Cent.

Appraisal Dist., 212 S.W.3d 665, 669 (Tex. App.—Austin 2006, no pet.); see also Universal

Printing Co. v. Premier Victorian Homes, Inc., 73 S.W.3d 283, 296 (Tex. App.—Houston [1st Dist.]

2001, pet. denied) (“There is no basis for declaratory relief when a party is seeking in the same action

a different, enforceable remedy, and a judicial declaration would add nothing to what would be

implicit or express in a final judgment for the enforceable remedy.”).

                Austin Engineering urges that it is not merely seeking a return of taxes paid under

protest, but a determination as to the validity and the constitutionality of the Comptroller’s actions

in assessing the tax. Essentially, Austin Engineering is asserting that the applicable statutes and rules

are unconstitutional as applied by the Comptroller in this case. A request for a declaratory judgment

regarding the constitutional validity of an agency action is distinct from, and therefore not redundant

to, a challenge to the correctness of the agency’s action. See Ben Robinson Co. v. Texas Workers’

Comp. Comm’n, 934 S.W.2d 149, 153 (Tex. App.—Austin 1996, writ denied); see also Local Neon

Co. v. Strayhorn, No. 03-04-00261-CV, 2005 Tex. App. LEXIS 4667, at *24 (Tex. App.—Austin

June 16, 2005, no pet.) (mem. op.) (holding that requests for declaratory relief related to

constitutional challenges were not redundant to remedies afforded by tax-protest suit). Thus, to the



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extent Austin Engineering seeks a declaration regarding the constitutionality of certain tax statutes

and regulations as applied in this case, the UDJA claim is not a redundant remedy.

                Austin Engineering has not, however, established its entitlement to the requested

declaratory relief as a matter of law. As discussed above, Austin Engineering has done no more than

raise a fact issue on the applicability of the exemption for consumable supplies required in the

performance of an exempt contract. Further, we express no opinion on Austin Engineering’s

constitutional claims, as these claims are contingent upon further proceedings to be held in the trial

court. Accordingly, the trial court did not err in denying Austin Engineering’s motion for summary

judgment with respect to its claims for declaratory relief, nor did it abuse its discretion in declining

to award attorney’s fees under the UDJA. See Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998)

(stating that attorney’s fee awards under UDJA are entrusted to trial court’s sound discretion).


                                          CONCLUSION

                We affirm that portion of the trial court’s order denying summary judgment in favor

of Austin Engineering, reverse that portion of the order granting summary judgment in favor of the

Comptroller, and remand the cause for further proceedings consistent with this opinion.



                                                ___________________________________________

                                                Diane M. Henson, Justice

Before Chief Justice Jones, Justices Henson and Goodwin

Affirmed in part; Reversed and Remanded in part

Filed: August 5, 2011


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