OPINION This is an appeal in a suit for a refund of over $230,000 in sales taxes. See Tex. Tax Code § 112.151. The trial court awarded El Paso Electric Co. a refund for April 2006 to December 2009 taxes because its equipment qualified for Tax Code section 151.318(a)(4)’s exemption for “telemetry units that are related to . . . step-down transformers.” In two issues, the Comptroller of Public Accounts and the Attorney General (collectively, the State)—required parties in suits for tax refunds, see id. § 112.151(b)—contend that (1) El Paso Electric did not timely raise its claim for the exemption for telemetry units related to step-down transformers in the administrative proceedings, which deprived the trial court of subject-matter jurisdiction, and (2) the equipment does not qualify for the exemption. We vacate the trial court’s judgment and dismiss the suit. BACKGROUND El Paso Electric is a fully integrated public utility in the business of manufacturing, generating, transmitting, and distributing electricity in west Texas and southern New Mexico. For the tax periods from April 2006 to December 2009, El Paso Electric believed that it overpaid sales taxes on customer meters, substation meters, and disconnect collars that it bought and used in its business. El Paso Electric believed each of these types of equipment to be “telemetry units that are related to . . . step-down transformers,” as Tax Code section 151.318(a)(4) uses that phrase. For the same period, it believed that it had also overpaid sales taxes on many other types of equipment, exempted by other provisions of the Tax Code. In all, it sought refunds totaling over $5.1 million, of which the Comptroller agreed to refund over $2.5 million. When a taxpayer seeks a refund for sales taxes allegedly overpaid, the taxpayer starts the refund process by filing with the Comptroller a refund claim that complies with Tax Code section 111.104. The Comptroller may agree to some or all of the claim. Under the Comptroller’s administrative rules in effect for the period relevant to this suit,[1] if the taxpayer was unsatisfied with the Comptroller’s response, the taxpayer then had to “request a refund hearing by timely submitting . . . a written request for a refund hearing,” which needed to “include a Statement of Grounds.” 34 Tex. Admin. Code § 1.5(c) (Tex. Comptroller of Pub. Accounts, Initiation of a Hearing), repealed by 43 Tex. Reg. 8126, 8126 (2018), adopted by 32 Tex. Reg. 2138, 2138 (2007), proposed by 32 Tex. Reg. 441, 442 (2007). If the Comptroller disagreed with the refund request, he was to explain why in a Position Letter to the taxpayer. 34 Tex. Admin. Code § 1.9 (Tex. Comptroller of Pub. Accounts, Position Letter), repealed by 43 Tex. Reg. at 8126, adopted by 32 Tex. Reg. at 2138, proposed by 32 Tex. Reg. at 443. If the taxpayer disagreed with the Position Letter’s conclusions, the taxpayer had to file a reply to the Position Letter. 34 Tex. Admin. Code § 1.10 (Tex. Comptroller of Pub. Accounts, Acceptance or Rejection of Position Letter), repealed by 43 Tex. Reg. at 8126, adopted by 32 Tex. Reg. at 2138, proposed by 32 Tex. Reg. at 443. The Comptroller’s Former Rule 1.7(e) forbade the taxpayer from amending the Statement of Grounds after the time for the reply to the Position Letter. 34 Tex. Admin. Code § 1.7(e) (Tex. Comptroller of Pub. Accounts, Content of Statement of Grounds; Preliminary Conference), repealed by 43 Tex. Reg. at 8126, adopted by 32 Tex. Reg. at 2138, proposed by 32 Tex. Reg. at 443. If the Comptroller and taxpayer could not resolve their dispute, they could refer their contested case to the State Office of Administrative Hearings (SOAH). See 34 Tex. Admin. Code § 1.22 (Tex. Comptroller of Pub. Accounts, Oral and Written Submission Hearings), repealed by 43 Tex. Reg. at 8126, adopted by 34 Tex. Reg. 5958, 5958 (2009), proposed by 34 Tex. Reg. 3506, 3507 (2009). El Paso Electric and the Comptroller proceeded through this administrative process—two refund claims, each with a Statement of Grounds, filed with the Comptroller on February 17, 2012, and August 20, 2012; Position Letters; replies to Position Letters; a contested-case hearing before SOAH; and the required motions for rehearing, see Tex. Tax Code § 111.105. The State argues that El Paso Electric first raised any claim for the exemption for telemetry units related to step-down transformers in what El Paso Electric called an “Alternative Argument” in a filing before SOAH. Right after El Paso Electric filed this document with SOAH, the State responded by objecting to the purportedly new claim. For its part, El Paso Electric argues that it first raised the claim in its two Statements of Grounds and their supporting schedules. The SOAH Administrative Law Judge ultimately issued a Proposal for Decision (PFD) that denied any refund, including on refund claims that are not the subject of this suit, and the Comptroller adopted it. In the PFD, the Administrative Law Judge found that El Paso Electric’s Statements of Grounds had not timely raised its claims for refunds under Tax Code section 151.318(a)(4)’s provision about telemetry units that are related to step-down transformers: As the [Notices of Hearing by Written Submission] state, [El Paso Electric]‘s Reply to the Position Letter listed six arguments to support its contention that additional refunds were warranted. [Comptroller] Staff agreed to allow certain additional refunds that resolved one contention, and, with its Written Submission Brief, [El Paso Electric] withdrew four contentions and stated that the sole remaining argument was that it was entitled to a refund of tax that was erroneously remitted on the purchase of certain electricity meters that were purchased for resale. However, [El Paso Electric] added an alternative argument; i.e., that the meters were exempt under Texas Tax Code § 151.318(a)(4). Staff objected to [this] alternative argument because it had not been raised previously. Staff points out that the Comptroller’s procedural rules state that a taxpayer’s Statement of Grounds must contain the reasons the taxpayer disagrees with the action of the agency. See Tex. Admin. Code § 1.7(a). . . . [F]or each contested item or category of items, the taxpayer must also state the factual basis and the legal grounds to support why the taxpayer argues that the tax should not be assessed or the tax should be refunded. Id. . . . [El Paso Electric's] alternative argument was first presented on November 4, 2016. Therefore, according to [Comptroller] Staff, [El Paso Electric]‘s alternative contention was not timely raised. The ALJ finds that Staff’s objection should be sustained, and the issue should be excluded as a contested case issue. El Paso Electric then sued in district court, seeking only a refund of over $230,000 under the exemption for telemetry units related to step-down transformers. The State filed a plea to the jurisdiction, arguing that El Paso Electric first raised its claims about “telemetry units that are related to step-down transformers” under Tax Code section 151.318(a)(4) too late in the administrative process, violating Tax Code section 111.104. The trial court denied the plea. The parties then tried the exemption claims to the bench. They contested whether the three types of equipment that formed the basis of El Paso Electric’s suit qualified as telemetry units that are related to step-down transformers. Much of the dispute turned on the issue of, in a given electrical system, how remote from a step-down transformer a telemetry unit may be before it is no longer “related to” the step-down transformer. In closing argument, counsel for the State acknowledged that the substation meters qualified for the exemption, based on the evidence presented at trial. The trial court entered judgment, supported by findings of fact and conclusions of law, awarding El Paso Electric $211,880.79 for its requested refund for the customer meters and substation meters. It also ruled that the disconnect collars were not tax-exempt. The State then appealed, but El Paso Electric has not appealed the trial court’s ruling on the disconnect collars. SUBJECT-MATTER JURISDICTION OVER SUIT FOR TAX REFUND In its first issue, the State contends that the trial court lacked subject-matter jurisdiction over El Paso Electric’s suit for a tax refund because it allegedly did not timely raise its claim for the exemption for telemetry units related to step-down transformers. The State argues that the trial court thus erred by denying its plea to the jurisdiction. In response, El Paso Electric argues that we have no jurisdiction to consider the trial court’s order denying the State’s plea to the jurisdiction because the State did not notice this appeal by the accelerated deadline for appeals of certain interlocutory jurisdictional orders. See Tex. Civ. Prac. & Rem. Code § 51.014(8) (providing for interlocutory appeal of denial of governmental unit’s plea to the jurisdiction); Tex. R. App. P. 26.1(b) (requiring parties to notice accelerated appeals within 20 days after signing of judgment or order being appealed); Tex. R. App. P. 28.1 (providing for accelerated treatment of appeals of interlocutory orders). But this is an appeal from a final judgment. See Tex. Civ. Prac. & Rem. Code § 51.012. The order denying the plea to the jurisdiction merged into the final judgment. See Webb v. Jorns, 488 S.W.2d 407, 408–09 (Tex. 1972); Wright v. Texas Comm’n on Human Rights, No. 03-03-00710-CV, 2005 WL 1787428, at *1 (Tex. App.—Austin July 27, 2005, pet. denied) (mem. op.). El Paso Electric offers no authority, and we are aware of none, requiring the Comptroller and Attorney General to notice an interlocutory appeal of an order denying their plea to the jurisdiction contesting subject-matter jurisdiction every time such an order is entered lest they forfeit review of the order on final appeal. Indeed, the Supreme Court of Texas recently “h[e]ld that a party does not forfeit its right to challenge a ruling on appeal from a final judgment simply by opting not to pursue an interlocutory appeal of that ruling.” Bonsmara Nat. Beef Co. v. Hart of Tex. Cattle Feeders, LLC, No. 19-0263, S.W.3d , 2020 WL 3476770, at *1 (Tex. June 26, 2020). Subject-matter jurisdiction “is a power that ‘exists by operation of law only, and cannot be conferred upon any court by consent[,] . . . waiver,’” judicial admission, judicial estoppel, or the like. In re Crawford & Co., 458 S.W.3d 920, 928 n.7 (Tex. 2015) (orig. proceeding) (per curiam) (quoting Dubai Petrol. Co. v. Kazi, 12 S.W.3d 71, 76 (Tex. 2000)). And challenges to subject-matter jurisdiction may be raised for the first time on appeal and then even by the appellate court sua sponte. See Texas Ass’n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 445–46 (Tex. 1993). We thus have jurisdiction to review the order denying the plea to the jurisdiction and the trial court’s subject-matter jurisdiction over the suit. We review the denial of a plea to the jurisdiction de novo. Combs v. Chevron, Inc., 319 S.W.3d 836, 840 (Tex. App.—Austin 2010, pet. denied). In a de novo review, we afford the trial court’s ruling no deference. McFadin v. Broadway Coffeehouse, LLC, 539 S.W.3d 278, 282 (Tex. 2018). Whether a court has subject-matter jurisdiction is a question of law. Combs, 319 S.W.3d at 840. In reviewing the jurisdictional facts, we confine our review to the evidence that is relevant to the jurisdictional issue. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 555 (Tex. 2000). And when, as here, the parties stipulate to the facts upon which subject-matter jurisdiction turns, we rule on the jurisdictional issue as a matter of law. See Texas Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 227–28 (Tex. 2004); University of Tex. v. Poindexter, 306 S.W.3d 798, 806 (Tex. App.—Austin 2009, no pet.). A suit for a tax refund must meet the jurisdictional requirements of Tax Code section 112.151(a). Hegar v. Mahindra USA, Inc., No. 03-18-00126-CV, 2020 WL 962415, at *6 (Tex. App.—Austin Feb. 28, 2020, no pet.) (mem. op.). Those are that the taxpayer has (1) filed a tax refund claim that complies with Tax Code section 111.104, (2) filed a motion for rehearing that both complies with Tax Code section 111.105 and has been denied, and (3) paid any applicable additional tax found due in certain jeopardy or deficiency determinations. Tex. Tax Code § 112.151(a)(1)–(3). “This statutory scheme makes clear that the trial courts only have jurisdiction over tax refund claims that are first raised in accordance with Tax Code section 111.104 and then appealed in a motion for rehearing under Tax Code section 111.105.” Chevron, 319 S.W.3d at 844. The parties’ dispute centers on the first step, Section 111.104. That statute requires a refund claim (1) to “be written”; (2) to “state fully and in detail each reason or ground on which the claim is founded”; and, uncontested here, (3) to be filed before the expiration of either of two specified periods, whichever expires later. Tex. Tax Code § 111.104(c)(1)–(3). The parties’ dispute further centers on the “fully and in detail each reason or ground” requirement of Subsection (c)(2). That requirement “is not ambiguous and, thus, we do not defer to the Comptroller’s interpretation” of it. Hegar v. Ryan, LLC, No. 03-13-00400-CV, 2015 WL 3393917, at *9 (Tex. App.—Austin May 20, 2015, no pet.) (mem. op.). It requires the reason or ground to “be stated in such a way as to put the comptroller on notice of the legal basis of the claim.” See id. at *10; accord Strayhorn v. Lexington Ins. Co., 128 S.W.3d 772, 779–80 (Tex. App.—Austin 2004) (holding that refund claims complied with Section 111.104 because “Comptroller was on notice of the legal bases for the[] claims”), aff’d, 209 S.W.3d 83 (Tex. 2006). The requirement also serves a broader “statutory scheme,” which is itself “designed so that the Comptroller is aware of the legal basis for the refund claim but then gives the taxpayer a period of time to prove its claim.” See Ryan, 2015 WL 3393917 at *11. Here, the legal basis of El Paso Electric’s refund claim is “telemetry units that are related to . . . step-down transformers” in Section 151.318(a)(4). If the legislature had deleted just that phrase from the statute, then El Paso Electric would be left without any legal basis for its refund claims in this suit. That phrase in the statute is thus the legal basis for its refund claims. The State argues that El Paso Electric first raised its claim for the exemption for telemetry units related to step-down transformers in what El Paso Electric called an “Alternative Argument” in a November 4, 2016 filing before SOAH. The State says that El Paso Electric’s first raising the exemption only then constituted an untimely amendment to its Statements of Grounds, which purportedly violates Former Rule 1.7(e) and Section 111.104(c)(2)’s “fully and in detail” requirement. The SOAH Administrative Law Judge agreed with the State, finding that El Paso Electric first presented the argument on November 4, 2016, well after its 2012 Statements of Grounds. In response, El Paso Electric argues that its two Statements of Grounds and their supporting schedules included a claim for the exemption. It argues that these filings put the Comptroller on notice of the legal basis of the claim because they cited Section 151.318 and its subsection (a)(4). El Paso Electric does not argue that it was advancing refund claims under all of Subsection (a)(4)’s listed categories of equipment—only that citing Subsection (a)(4) sufficed to put the Comptroller on notice of a refund claim for telemetry units related to step-down transformers. El Paso Electric argues that “a recent opinion of this Court”—Silicon Laboratories, Inc. v. Hegar, No. 03-17-00061-CV, 2018 WL 3405459 (Tex. App.—Austin July 13, 2018, pet. denied) (mem. op.)—”indicates merely citing to Tax Code § 151.318 is sufficient, without even citing a specific subsection.” In that case, we held that a Section 151.318(b)(2) refund claim for “semiconductor fabrication cleanrooms and equipment” met the Section 111.104(c)(2) requirement when both, (1) “in its written grounds for refunds filed with the Comptroller,” the taxpayer “specifically referenced the manufacturing exemption in section 151.318″ and, (2) in the motion for rehearing, the taxpayer referenced subsections (b)(2) and (q) of Section 151.318. See id. Subsection (q) provides the definition of the phrase “semiconductor fabrication cleanrooms and equipment” used in Subsection (b)(2); it does not itself provide any extra exemption. See Tex. Tax Code § 151.318(q) (defining “semiconductor fabrication cleanrooms and equipment” “[f]or purposes of Subsection (b)”). In its reply brief, the State gives further context to El Paso Electric’s arguments. It notes that, in the Statements of Grounds, El Paso Electric simply quoted in full Section 151.318′s subsections (a)(1), (2), (4), (5), (6), (7), (8), (9), (10), and (11). Subsection (a)(4) lists over four dozen categories of equipment, each of which qualifies for an exemption: The following items are exempted from the taxes imposed by this chapter if sold, leased, or rented to, or stored, used, or consumed by a manufacturer: . . . . actuators, steam production equipment and its fuel, in-process flow through tanks, cooling towers, generators, heat exchangers, transformers and the switches, breakers, capacitor banks, regulators, relays, reclosers, fuses, interruptors, reactors, arrestors, resistors, insulators, instrument transformers, and telemetry units that are related to the transformers, electronic control room equipment, computerized control units, pumps, compressors, and hydraulic units, that are used to power, supply, support, or control equipment that qualifies for exemption under Subdivision (2) or or to generate electricity, chilled water, or steam for ultimate sale; transformers located at an electric generating facility that increase the voltage of electricity generated for ultimate sale, the electrical cable that carries the electricity from the electric generating equipment to the step-up transformers, and the switches, breakers, capacitor banks, regulators, relays, reclosers, fuses, interruptors, reactors, arrestors, resistors, insulators, instrument transformers, and telemetry units that are related to the step-up transformers; and transformers that decrease the voltage of electricity generated for ultimate sale and the switches, breakers, capacitor banks, regulators, relays, reclosers, fuses, interruptors, reactors, arrestors, resistors, insulators, instrument transformers, and telemetry units that are related to the step-down transformers. Tex. Tax Code § 151.318(a)(4). By contrast, Section 151.318(b)(2) more narrowly provides: The exemption includes: . . . . (2) semiconductor fabrication cleanrooms and equipment. Id. § 151.318(b)(2). Silicon Laboratories is distinguishable because it involved a Section 151.318(b)(2) refund claim—a refund claim relating to semiconductor fabrication where the relevant statutory subsection addresses that kind of refund claim only. By contrast here, El Paso Electric’s refund claim at issue is only for telemetry units related to step-down transformers, but it purported to advance that claim by quoting not only all of Section 151.318(a)(4)’s list of over four dozen categories of exempted items but also nearby subsections (a)(1), (2), (5), (6), (7), (8), (9), (10), and (11) too. We hold that, on its own, quoting every word of all those subsections did not suffice to put the Comptroller on notice of the legal basis of a refund claim for telemetry units related to step-down transformers. See Bland Indep. Sch. Dist., 34 S.W.3d at 555; Ryan, 2015 WL 3393917, at *10–11; Lexington Ins., 128 S.W.3d at 779–80. To see why, note that two of Subsection (a)(4)’s other categories are telemetry units related to step-up transformers and those related to other transformers generally. See Tex. Tax Code § 151.318(a)(4). Thus, quoting all of Subsection (a)(4), without more, does not even put the Comptroller on notice of what category of telemetry units is the subject of a refund claim. Without specifying that telemetry units related to step-down transformers was the basis of the refund claim, the quotation of all of Subsection a)(4) plus the other nine statutory subsections did not inform the Comptroller on what basis he must defend against the claim. See Ryan, 2015 WL 3393917, at *10–11; Lexington Ins., 128 S.W.3d at 779–80. El Paso Electric advances a second argument for why its refund claims complied with Section 111.104 by arguing that citing Section 151.318 in certain line items of the supporting schedules that were attached to the Statements of Grounds sufficed. The State offers “a typical line item” from the schedules, which we reproduce first below, followed by eight other representative line items: VendorInv Date. . .R DescriptionTax Reference. . . Itron Electricity Metering Inc5/9/2006. . .Sentinel meterTTC 151.318; TAC 3.300. . . . . . . Itron Electricity Metering Inc10/3/2006. . .Centron meterTTC 151.318; TAC 3.300. . . . . . . Itron Electricity Metering Inc8/8/2007. . .Billing for shipped metersTTC 151.318; TAC 3.300. . . . . . .
Itron Electricity Metering Inc 8/10/2007 . . .IO module assembly with analog output for meter TTC 151.318; TAC 3.300 . . . Itron Electricity Metering Inc8/13/2007. . .Misc logistics, basic Q1000TTC 151.318; TAC 3.300. . . . . . .
