Arunasalam (Migration)

[2020] AATA 6168

Arunasalam (Migration) [2020] AATA 6168 (11 August 2020)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  

Ms Parvathi Arunasalam

Mr Balakrishnan Vengadachalam

Mr Sivakumar Balakrishnan

Mr Dharaneesh Balakrishnan

CASE NUMBER:  1827435

HOME AFFAIRS REFERENCE(S): BCC2016/1463227 BCC2017/3895002 BCC2018/4788146 BCC2018/4788176 BCC2018/4788304

MEMBER:Susan Hoffman

DATE:11 August 2020

PLACE OF DECISION:  Perth

DECISION:The Tribunal affirms the decision not to grant the visa applicants Business Skills (Residence) (Class DF) visas.

Statement made on 11 August 2020 at 10:11am

CATCHWORDS
MIGRATION – Business Skills (Residence) (Class DF) visa – Subclass 892 (State/Territory Sponsored Business Owner) – business turnover of at least $200,000 – gross sales – BAS prepared on a cash basis – other financial records based on accrual accounting methods – shipment despatched – outstanding payments – decision under review affirmed

LEGISLATION
Migration Act 1958 (Cth), s 65

Migration Regulations 1994 (Cth), Schedule 2, cl 892.213

STATEMENT OF DECISION AND REASONS

APPLICATION FOR REVIEW

1. This is an application for review of a decision made by a delegate of the Minister for Home Affairs on 4 September 2018 to refuse to grant the visa applicants Business Skills (Residence) (Class DF) visas under s.65 of the Migration Act 1958 (the Act).

2. The applicants applied for the visas on 15 April 2016. At the time of application, Class DF contained four subclasses: 890 (Business Owner), Subclass 891 (Investor), Subclass 892 (State/Territory Business Owner) and 893 (State/Territory Sponsored Investor). The applicants in this case are seeking to satisfy the criteria for the grant of Subclass 892 (State/Territory Business Owner) visas, as set out in Part 892 of Schedule 2 to the Migration Regulations 1994 (the Regulations). At least one member of the family unit must satisfy the primary criteria set out in Subdivision 892.2. The others need only to satisfy the secondary criteria set out in Subdivision 892.3.

3. The first-named applicant (henceforth the applicant) is the owner of one nominated business which, according to the evidence, provides transport and logistic services, and is also involved in trading milk products.

4. The delegate in this case refused to grant the visas on the basis that the applicant did not satisfy the requirements of cl.892.213 of Schedule 2 to the Regulations. The delegate was not satisfied that the applicant’s main business had a business turnover of at least $200,000 immediately before the application was made. The delegate considered alternative requirements and in relation to those, was not satisfied that they were met as the appropriate regional authority had not identified pertinent exceptional circumstances.

5. The Tribunal wrote to the applicant on 14 July 2020 requesting specific information by 28 July 2020. The letter included the following paragraphs:

   If you cannot provide the information by 28 July 2020, you may ask us for an extension of time in which to provide the information.  If you make such a request, it must be received by us before 28 July 2020 and you must state the reason why the extension of time is required.

   We will carefully consider any request for an extension of time and will advise whether or not the extension has been granted.

   If we do not receive the information within the period allowed or as extended, we may make a decision on the review without taking any further action to obtain the information.  You will also lose any entitlement you might otherwise have had under the Migration Act 1958 to appear before us to give evidence and present arguments.

6. The applicant did not make any response before 28 July 2020. As at 10 August 2020, no response had been received. The Tribunal proceeded to make its decision without a hearing.

7. The applicants were represented in relation to the review by a registered migration agent.

8. For the following reasons, the Tribunal has decided that the decision under review should be affirmed.

   CONSIDERATION OF CLAIMS AND EVIDENCE

9. The issue in this case is whether the applicant’s main business had a business turnover of at least $200,000 immediately before the application was made, and if not, whether the alternative requirements were met.

10. Clause 892.213 reads as follows:

    (1)  The applicant meets the requirements of subclause (2) or (3). 

    (2)  An applicant meets the requirements of this subclause if, in the 12 months immediately before the application is made, the applicant’s main business in Australia, or main businesses in Australia together, had an annual turnover of at least AUD200 000. 

    (3)  An applicant meets the requirements of this subclause if: 

    (a)  the applicant meets at least 2 of the requirements set out in paragraphs 892.212(a), (b) and (c); and

    (b)  the applicant resides in, and operates the applicant’s main business or businesses in Australia in, an area specified in an instrument in writing made by the Minister for this paragraph; and

    (c)  the appropriate regional authority has determined that there are exceptional circumstances for this subclause.

11. That is, the applicant has to meet the requirements of either subclause 892.213(2) or 892.213(3).

12. The Tribunal will consider subclause 892.213(2) first. It is not in dispute that the applicant had 100% ownership in the main business when the application was lodged on 15 April 2016.[1] The relevant period for assessing whether the annual turnover was at least $200,000 immediately before the application was made is therefore the period 15 April 2015 to 14 April 2016. The applicant had provided BAS to the Department which showed the turnover to be as follows:

    [1] That was found by the AAT (differently constituted) in a decision made 3 April 2018.

Period	Gross Sales AUD
1 April 2014 to 30 June 2014	37,932
1 July 2014 to 30 September 2014	37,685
1 October 2014 to 31 December 2014	37,202
1 January 2015 to 31 March 2015	54,096
Total gross sales	166,915
1 April 2015 to 30 June 2015	37,769
1 July 2015 to 30 September 2015	31,151
1 October 2015 to 31 December 2015	29,311
1 January 2016 to 31 March 2016	62,176
Total gross sales	160,407

1. The applicant informed the Department that the BAS were prepared on a cash basis. She provided financial statements for the 12 months ended 28 February 2015 and 29 February 2016 prepared on an accrual basis which recorded gross sales of $173,506 and $246,102 respectively.

2. The delegate recorded that there was a variation of AUD 85,695 between the BAS and the financial records, largely due to one set of records being based on cash and the other based on accrual accounting methods. The applicant’s bookkeeper, Top Class Bookkeepers, provided a statement addressed “To Whom It May Concern” dated 20 June 2018 in which they stated that the financial statements to February 2016 were for an eight-month period and not a whole year. This was at odds with a letter from the business’s accountants. M Consulting, Chartered Accountants, and the headings on the financial statements, which stated that the financial statements were for a 12-month period ended 29 February 2016. The Tribunal accepts that these financial statements were for 12 and not eight months, as this makes sense given other evidence.

3. The delegate also recorded that further evidence was requested on 30 May 2018 to explain the basis of the accrued sales, along with evidence that the invoices included in the accrued sales figure had been paid by their respective debtors.

4. According to the delegate’s decision, the applicant’s bookkeeper provided information such that there were two sales included in the accrued sales figure, of AUD 10,595 and AUD 75,000. In his letter of 20 June 2018, the bookkeeper described these as export sales. He wrote that the sale of AUD 10,595 was cancelled by the customer in March 2016. The Tribunal is satisfied that it was not a sale made during the relevant period (15 April 2015 to 14 April 2016) and can therefore be disregarded.

5. With regards to the invoice for AUD 75,000, this was for the export of 30,000 kgs of skimmed milk powder to a customer in India, Sree Amithra Export and Import (Sree Amithra). The relevant invoice was numbered SA1501 and was dated 27 June 2015. The applicant explained to the Department that the milk was exported from Malaysia to India, and Surabi acted as the middleman in this transaction whereby a Malaysian company, Promac Food Products (Promac) supplied the powdered milk to Sree Amithra.

6. As Promac invoiced Surabi for the skimmed milk powder and Surabi invoiced Sree Amithra, the Tribunal does not consider the term “middleman” is accurate in this context. The Tribunal is not suggesting that there was an intent to mislead, but simply that the wrong term was used.

7. The evidence in the documents to do with Surabi purchasing the skimmed milk powder from Promac includes the following:

   ·A proforma invoice from Promac to Surabi dated 25 August 2015 for 1,200 x 25K bags of skim milk powder (30,000 kgs) to be shipped to India in September or October 2015, with the cost being USD 52,200.  

   ·According to a bill of lading, departure was from a port in Malaysia and delivery was to a port in India. The document recorded that the shipper was Surabi, the goods were 1,200 bags of skim milk powder in 25 kg bags (30,000 kgs in total) and they were shipped on 11 September 2015.

   ·Promac confirmed in a document dated 8 August 2018 that it had received payments from Surabi as follows:

   October 2015             USD 7,200

   December 2016         USD 6,000

   November 2017         USD 5,000

   August 2018               USD 7,000.

   The balance outstanding as at August 2018 was USD 27,000.       

8. This evidence indicates that the goods were shipped in September 2015 and the only payment in the first twelve months following the shipment was USD 7,200. The delegate recorded in their decision that the payment made in August 2018 was made after the Department requested more evidence on Surabi’s turnover which it did in May 2018. Three years after the goods were shipped, more than 50% of the invoice value had not been paid.

9. The evidence in the documents to do with the other side of the transaction - Surabi selling the 30,000 kgs of skimmed milk powder to Sree Amirtha – includes the following:

   ·As already recorded, an invoice from Surabi to Sree Amirtha numbered SA1501 and dated 27 June 2015 for AUD 75,000.

   ·Also as already recorded, the goods were shipped on 11 September 2015.

   ·According to a letter from Mrs Arunasalam to the Department dated 27 June 2018, Sree Amirtha made payments to Surabi in relation to invoice SA1501 as follows:

   20 October 2015  AUD 6,000

   1 February 2016  AUD 2,500

   31 March 2016  AUD 3,450

   25 June 2018  AUD 25,000

   25 June 2018  AUD 10,000

   AUD 46,950

10. This evidence indicates that the goods were shipped in September 2015 and six months later, only AUD 11,950 had been paid by Sree Amirtha to Surabi. No further payment was made for more than two years, and according to the delegate, the June 2018 payments were made after the Department requested more evidence on turnover. Some three years after the shipment was made, 37.4% of the invoice value was unpaid.

11. The bookkeeper wrote on 20 June 2018 that the invoice for $75,000 was included in the June 2015 BAS, which is a reference to the BAS for the period 1 April 2015 to 30 June 2015.

12. However, the BAS for that period records GST sales of $37,769 and export sales of $9,610. The Tribunal checked other BAS statements to ascertain whether export sales were included in the turnover figures provided by the applicant based on the quarterly BAS, as per paragraph 11 above.

Period	Sales AUD	Export sales
1 April 2015 to 30 June 2015	37,769	9,610
1 July 2015 to 30 September 2015	31,151	0
1 October 2015 to 31 December 2015	29,311	0
1 January 2016 to 31 March 2016	62,176	34,016
Total sales	160,407	43,626

1. After the delegate made inquiries in May 2018 as to the turnover, the applicant provided the Department with a second BAS for the period 1 April 2015 to 30 June 2015 which showed sales of AUD 112,769 and export sales of AUD 84,610. According to this BAS, the GST accounting method was cash and the BAS was lodged on 20 June 2018.

2. The sales and exports sales figures recorded in the BAS lodged 20 June 2018 were AUD 75,000 higher than the sales figures recorded in the original BAS figures as provided to the Department. The difference relates to Invoice SA1501 for AUD 75,000, already discussed at some length.

3. It is unclear to the Tribunal why, if there was a genuine sale in respect of goods shipped in September 2015, payments were received in October 2015 and February and March 2016 (see paragraph 21), and the original BAS was prepared on a cash basis, that those payments were not recorded in the BAS covering those payment dates.

4. The Tribunal wrote to the applicant on 14 July 2020, asking for specific information. The Tribunal set out background information consistent with the evidence recorded above, followed by questions including the following:

   Referring to the AUD 75,000 invoice from Surabi to Sree Amithra, why were the goods despatched before payment was made, and why, as at August 2018, nearly three years later, was there still AUD 28,050 outstanding?

   Referring to the USD 52,200 invoice from Surabi to Promac, why did Promac despatch the shipment from Malaysia to India before payment was made, and why, almost three years after despatch, was more than 50% of the invoice value outstanding?

   Have any further payments been made, and if so, when?

   What is the explanation for the payments to and from Surabi in relation to this shipment being spread over so many years?

5. As noted at paragraph 5, the applicant failed to respond (by either addressing the questions or asking for more time in which to do so) by the due date.

6. The Tribunal notes that unless there is an established relationship between buyer and seller with regard to exports, generally the buyer pays for goods before they are shipped. The payment might be held in trust pending receipt of the goods. The payments made to and from Surabi with regard to Invoice SA1501 are not consistent with usual business practice. No satisfactory explanation has been provided as to why business was conducted in this fashion. 

7. Given the evidence before it, the Tribunal cannot be satisfied that Invoice SA1501 for AUD 75,000 reflected a genuine sale of goods to that value and therefore cannot be satisfied that business turnover in the 12-month period before the application was lodged was at least AUD 200,000.

8. The Tribunal is not satisfied that the criteria set out in 892.213(2) has been met. The Tribunal considered whether the applicant met the alternative criteria in 892.213(3).

9. The documents include a departmental form completed by an officer from Western Australia’s Small Business Development Corporation and dated 13 April 2016. Question 25 on the form asks if it had been determined that there were exceptional circumstances and if it had been decided to waive  certain requirements set out under clause 892.212. The answer to these questions was yes.

10. Question 26 asked similar questions in relation to waiving turnover requirements as specified in cl. 892.213. It was noted on the form under this question that a turnover waiver cannot be exercised if a waiver has already been exercised in relation to business requirements specified for question 25.

11. The Small Business Development Corporation (being the appropriate regional authority) did not record on the form that it had determined that there were exceptional circumstances pertinent to subclause 892.213 which means that the criteria in 892.213(3) is not met.

12. Accordingly, cl.892.213 is not met.

    CONCLUDING PARAGRAPHS

13. Given the findings above, the decision under review must be affirmed in relation to the primary applicant. There was no evidence before the Tribunal that any other of the family members would satisfy the primary criteria set out in subdivision 892.2.

    DECISION

14. The Tribunal affirms the decision not to grant the applicants Business Skills (Residence) (Class DF) visas.

    Susan Hoffman
    Member