Thе opinion and judgment issued by this Court on January 6, 2000, are withdrawn, and the following opinion is substituted in lieu thereof. These companion cases, consolidated for appeal, concern the taxability of line-engineering services required to reconfigure mobile telephone networks. The Comptroller contends the servicеs are taxable as “part of the sale” of telecommunications equipment because the services and equipment were sold under one contract of sale. The taxpayers argue that the line-engineering services were “readily separable” from the sale of the equipment and that only the equipment sale is subject *486 to the imposition of sales tax. In both causes the parties submitted competing motions for summary judgment; the trial court granted summary judgment in favor of both taxpayers and denied the Comptroller’s motions. We will affirm the trial court’s judgments.
BACKGROUND
Dallas SMSA and San Antonio SMSA Limited Partnerships (taxpayers) provide mobile radio service in vаrious metropolitan areas, including Dallas and San Antonio. Their networks include a mobile telephone switching office, transmission facilities, and cell sites, all designed to provide service to cellular telephone customers. The mobile telephone switching office has been called a “traffic cop,” as it controls the switching equipment needed to interconnect with the land telephone network, the actions of the cell site, and the many actions of the mobile units. It is the goal of the taxpayers to coordinate and update the mobile telephone switching office without interference noticeable to its customers. All network equipment must be configured and interconnected to work together without interruption, even when equipment is being added or updated. The professional engineering services at issue consist of advice on how to reconfigure the network without disrupting service.
The taxpayers sought to replace or add equipment to a cell site or switch location. They purchased mobile telephone switch office equipment, cellular equipment, electronic switching equipment, and related peripherals. Because no two cell sites or switches are exactly alike, the taxpayers first obtained line-engineering sеrvices to determine the specifications for new equipment that would interconnect with their existing telecommunications system. The complexity of each cell site or switch necessitates special engineering services to determine the requirements for a particular site.
According to the taxpayers, there are four vendors of new switching equipment, each of whom also provides the line-engineering services at issue in this appeal. Occasionally the taxpayer is able to perform these engineering services in-house; however, that was not done here. According to the affidavit of Ken Dickens, a senior manаger for Southwestern Bell Mobile Systems, Inc., the engineering services are provided on a “stand-alone” basis; that is, the taxpayer is not required to purchase the engineering services from the vendor who supplies the equipment, and the price of the equipment is not affected by acquiring the engineering services from a different vendor. Engineering services may also be required when moving network equipment, apart from any purchase.
In this instance AT & T supplied both the equipment and the engineering services. The taxpayers first purchased line-engineering services from AT & T’s engineering divisions in Chicago and St. Louis. After this assessment was done, they purchased new equipment from the manufacturing division of AT & T in Columbus, Ohio. AT & T separately stated the charges for the engineering services and the equipment to each taxpayer, but an integrated invoicing system included the charges on a single invoice. The Comptroller insists that because of this single invoice, the engineering services were “part of the sale” of the equipment, subjecting the entire transaction to sales tax. The taxpayers insist that these line-engineering services are separable from the sale of the equipment and that each transaction should be considered independently for the imposition of sales tax.
After an audit the Comptroller assessed sales tax of $86,336.06 on Dallas SMSA for the purchase of engineering services for the period January 1,1989 through August 31, 1992. Likewise the Comptroller assessed sales tax of $8,601.29 on San Antonio SMSA for the purchase of engineering services during the period January 1, 1989 through September 30, 1992. The taxpay *487 ers paid the sales tax under protest and now seek a refund оf the amounts paid plus interest.
When both sides move for summary judgment and the trial court grants one motion and denies the other, we review the summary judgment proof presented by both sides and determine all questions presented.
See Commissioners Court v. Agon,
DISCUSSION
The legislature has imposed a sales tax on certain services in section 151.0101(a) of the Tax Code; engineering services are not included in this list.
See
Tex. Tax Code Ann. § 151.0101(a) (West Supp.2000). Instead, the Comptroller seeks to assess a sales tax because these services were a “part of the sale” of the telecommunications equipment purchased by the taxpаyers.
See
Tex. Tax Code Ann. § 151.007(b) (West Supp.2000) (total amount for which taxable item is sold includes service that is part of sale). When a nontaxable service is bundled with a taxable sale or service, we apply the “essence-of-the-transaction” doctrine to determine whether the service is a part of the sale.
See Sharp v. Direct Resources for Print, Inc.,
The transaction at issue in this appeal seems to fall in neither of these categories. When the purchase of a nontaxable service is combined with the purchase of taxable property, but each transaction is independently desired and independently provided, we have a mixed transaction in which neither element is “incident” to the other. In determining the taxability of this kind of transaction, we are guided by the thoughtful analysis of the Rhode Island Supreme Court in determining the taxability of an almost identical purchase involving engineering services required to assist the buyer in purchasing telecommunications equipment.
See New England Tel. & Tel. Co. v. Clark,
The Rhode Island court found that the purchase of engineering services and telecommunication equipment at issue in Clark did not fit into either of these “essenee-of-the-transaction” categories. See Clark, 624 A.2d at 302. Instead it found that the transaction better fit into a third category in which the two elements of a mixed transaction involving service and tangible property are “readily separable”: “[Wjhen there is a fixed and ascertainable relationship between the value of the article and the value of the services rendered, and each is a consequential element capable of a separate and distinct transaction, then the elements must be analyzed as separate transactions for tax purposes.... ” Id. at 301.
The mixed transaction we consider in this appeal seems to fall in this category: neither part of the transaction is incident to the other and each has separate value. Indeed it cannot be said that there is but one “essence” to this transaction between the taxpayers and AT & T. The real object of the transaction was both the advice obtained through the line-engineering services and the resulting equipment that was needed to update and interface with the existing switching facilities. The cost of the two elements of the mixed transaction are distinct and identifiable. When a mixed transaction is “readily separable” into two elements of equal value, we adopt the simple result reached in Clark: “[T]he elements must be analyzed as separate transactions for tax purposes ... the proрerty aspect of the transaction would be taxable and the service aspect of the transaction would not be taxable.” Id. at 301.
Although the combination of services and equipment involved in this appeal appears to be “readily separable,” the Comptroller urges that because the two transactions are invoiced on one contract of sale they must be treated as one taxable transaction. Were we to adopt this one-contract theory, engineering services would be taxable when performed by one vendor who later supplies equipment but not taxable when performed by another vendor. Or, the services would be taxable if a vendor has an integrated billing system, but not taxable if the same vendor sends a separate contract for each purchase. Such a theory would inevitably lead to manipulation: “Please wait and bill me separately for the services I am purchasing.”
The Comptroller’s interpretatiоn that services billed in the same contract as the sale of equipment are part of the sale is unreasonable because it would result in an uneven application of the legislature’s stated tax policy. Recognizing that its one-contract theory is subject to this criticism, the Comptroller emphasizes that its interpretation of section 151.007(b) relies on two factors not one: a service is “part of the sale” when it is sold under the same contract of sale and is directly related to the taxable item. The Comptroller relies on the fact that these line-engineering services were directly related to the equipment purchased under thе single contract of sale to subject the services to sales tax under section 151.007(b). Even adding a second prong to the one-contract theory *489 does not overcome the potentially irrational application of this interpretation of section 151.007(b).
The taxpayers note that the Comptroller’s own rules recognize as nontaxable any service, provided together with the sale of a taxable service, if it is distinct and identifiable, if it can be provided on a stand-alone basis, and if it is not included in the services taxed under section 151.0101(a).
See
34 Tex. Admin. Code § 3.357 (1999) (describing unrelated services that are deemed nontaxable). The factors listed in thе Comptroller’s rule are remarkably similar to the factors relied on in
Clark
to identify services that are readily separable from the sale of equipment.
See Clark,
The line-engineering services at issue here were рerformed to determine what equipment was needed to enhance the mobile telephone switching office and how to integrate the new equipment without disrupting service; these services had value that was not merely incident to the purchase of the new equipment. The taxpayers note the stand-alone nature of these engineering services; they could have been performed by someone other than AT & T, either another vendor or an in-house employee. Indeed a totally separate department of AT & T, unrelated to sales and located in a different city, performed the engineering services. There was one contract of sale, but a charge for line-engineering services was listed separately from the cost of the equipment. 1 There was a need for the engineering assessment that was as important to the taxpayers as the equipment itself. Where the services are distinct and identifiable, the existence of a single contract does not make the engineering services incident to the purchase of the equipment. We hold that neither element of this mixed transaction was incident to the other. The taxpayers had two real objectives: to learn from the line-engineering services how to update their network without disrupting service to their customers, and to purchase equipment that would both update and interconnect smoothly with their existing facilities. These two transactions were “readily separable” and must be analyzed as distinct transactions for sales tax purposes.
The existence of a single invoice or a single contract will not affect taxability. When “readily separable” transactions have been provided, each transaction must be analyzed independently to determine if a sales tax shall be imposed.
CONCLUSION
Because we determine that the taxpayers’ purchase of line-engineering services was a readily separable transaction from its рurchase of equipment, we hold that the engineering services are not “a part of the sale” of tangible personal property and *490 consequently are not subject to taxation under section 151.007(b). Therefore, we affirm both summary judgments in favor of the taxpayers.
Notes
. In
Direct Resources
the Comptroller argued that the taxable printing of envelopes was readily separable from the nontaxable direct mail service because it was
separately invoiced
on the same bill, as were the line-engineering services at issue here.
See Direct Resources,