Bansal (Migration)
[2024] AATA 1604
•22 May 2024
Bansal (Migration) [2024] AATA 1604 (22 May 2024)
DECISION RECORD
DIVISION:Migration & Refugee Division
APPLICANTS: Mr Aakhesh Kumar Bansal
Mrs Renu Bansal
Mr Yash Bansal
Mr Kanav BansalREPRESENTATIVE: Mr Sukhwinder Singh (MARN: 1685730)
CASE NUMBER: 2111850
HOME AFFAIRS REFERENCE(S): BCC2019/4126360
MEMBER:Peter Ranson
DATE:22 May 2024
PLACE OF DECISION: Brisbane
DECISION:The Tribunal remits the applications for Business Skills (Provisional) (Class EB) visas for reconsideration, with the direction that the first named visa applicant meets the following criteria for a Subclass 188 (Business Innovation and Investment (Provisional)) visa:
·cl.188.232 of Schedule 2 to the Regulations.
Statement made on 22 May 2024 at 3:38pm
CATCHWORDS
MIGRATION – Subclass 188 (Business Innovation and Investment (Provisional)) visa – Subclass 188 – a qualifying business – applicant had an ownership interest in the nominated convenience store business at the relevant times – applicant continues to have an ownership interest in the main business – businesses were actively operating in Australia – decision under review remitted
LEGISLATION
Migration Act 1958, ss 65, 134
Migration Regulations 1994, Schedule 2, cl 188.232
CASES
Shahpari v Minister for Immigration and Border Protection [2016] FCCA 513
STATEMENT OF DECISION AND REASONS
BACKGROUND
Mr Bansal and his family are from India. They came to live in Australia in December 2015 and together with another Indian national, he purchased an interest in a 7-Eleven store in outer Melbourne. Unfortunately, that business relationship did not end well for Mr Bansal. The business eventually closed and was later sold, and he got back very little of the funds he had invested in it. He embarked on a new venture in a similar type of business, this time as a retail tobacconist. This business has gone well, and a second store has been acquired.
The first issue in this case is whether Mr Bansal has one or two businesses.
The applicants applied for the visas on 20 August 2019. Class EB contains Subclass 188 (Business Innovation and Investment (Provisional)). The criteria for the grant of a Subclass 188 (Business Innovation and Investment (Provisional)) visa are set out in Part 188 of Schedule 2 to the Migration Regulations 1994 (Cth).
The primary criteria must be satisfied by at least one applicant. Mr Bansal is the primary visa applicant and the review applicant and is seeking to satisfy the primary criteria for a Subclass 188 visa in the Business Innovation Extension stream which include the criteria in Subdivisions 188.21 and 188.23 of Schedule 2 to the Regulations. Other members of the family unit who are applicants for the visa need satisfy only the secondary criteria. The primary criteria include common criteria, and criteria set out in streams. In this case, Mr Bansal applied for the visa in the Business Innovation Extension stream.
On 31 August 2021, a delegate of the Minister for Home Affairs refused to grant the applicants Business Skills (Provisional) (Class EB) visas under s 65 of the Migration Act 1958 (Cth) on the basis Mr Bansal did not satisfy the requirements of cl.188.232 of Schedule 2 to the Regulations because his ownership interest in the 7-Eleven business ended before he applied for the visa and so he did not hold that interest for at least two years before he applied. Mr Bansal then lodged an application for review of that decision.
The secondary applicants applied based on being members of the family unit of the Applicant. The delegate found the secondary applicants could not be granted Subclass 188 visas, as they did not meet the primary criteria, nor did they meet the secondary visa criterion (cl.188.311) requiring them to be members of the family unit of a person who met the primary visa criteria.
The second issue in this case is whether Mr Bansal had an ownership interest in one or two actively operating main businesses for the two years before 20 August 2019 and whether he continues to have that ownership interest.
For the following reasons, the Tribunal has concluded the matter should be remitted for reconsideration.
CONSIDERATION OF CLAIMS AND EVIDENCE
A note about policy
The Tribunal is charged with determining the correct or preferable decision based on an independent assessment of the facts before it and is entitled to treat policy as a relevant factor in that determination. The Full Federal Court has found that where a policy exists to guide the decision maker in exercising its powers, the Tribunal may apply that policy in reviewing a decision where it "makes it clear that it has considered the propriety of the particular policy and expressly indicates the considerations which have led it to that conclusion”.[1]
[1] Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409, from 420.
To the extent the Tribunal has considered policy in this case, it has not applied it inflexibly and has only considered it to the extent the policy is consistent with the requirements as set out in the legislation.
Ownership interest in main business – cl.188.232
Before considering the business or businesses relied on by Mr Bansal it is necessary to first determine whether the two businesses he nominated are one and the same because there are a lot of similarities and some differences between them. Mr Bansal has been involved with a retail grocery business under a 7-Eleven franchise and a retail tobacconist business under a Freechoice franchise, each operated by different entities.
Clause 188.232(1) requires that for at least the two years immediately before the application was made, the applicant had an ownership interest in one or more main businesses that were actively operating in Australia. There is an alternative for applications made on or after 19 September 2020, which does not apply here as Mr Bansal applied on 20 August 2019.
Clause 188.232(2) requires the applicant must continue to have the ownership interest mentioned in cl.188.232(1) at the time of this decision.
Case law has established a business is not a legal entity but rather an enterprise or undertaking.[2] It is therefore important for the Tribunal to identify the business to which the definition of main business must be applied. It is also important to note that one business can be owned by multiple entities and conversely, multiple businesses can be owned by one entity. For the avoidance of doubt, an Australian Business Number (ABN) attaches to an entity (such as a company, trust, partnership or sole trader), not to a business enterprise.
[2] Ibrahim v MIAC [2009] FCA 1328 at [30].
As mentioned above, a business is an enterprise separate from the entity which operates it. At the hearing he said the 7-Eleven business sold groceries and associated products including tobacco and related smoking products. The website of 7-Eleven indicates their stores sell food, drinks, gift cards and sometimes fuel. Self-evidently, a tobacconist business sells tobacco and related smoking products. According to the Freechoice website:
‘Freechoice Tobacconist offers a wide selection of high-quality products at the best possible price point. From tobacco products and pet supplies to inexpensive gifts and homeware, we have everything you can need.’
Also self-evidently, both businesses are open to the public from commercial premises usually for long hours each day and sometimes 24/7.
Accordingly, the Tribunal finds Mr Bansal only has one business (as opposed to the entities which operate it), that of a retail convenience store operated over the relevant times by two companies because they are open to the public from small retail premises and sell a variety of goods with tobacco and related smoking products being common to both.
The business relied on by Mr Bansal to satisfy these requirements is a retail convenience store operated:
a.Firstly, by DSMS Corporations Australia Pty Ltd, then by
b.SBM Trading Australia Pty Ltd.
Accordingly, the Tribunal must consider the nature of Mr Bansal’s interest in the convenience store business, whether it was actively operating and whether it met the definition of ‘main business’ for at least the two years immediately prior to the date of application.
Does the applicant have an ownership interest in each business relied on at the relevant time?
An ‘ownership interest’, in relation to a business, means an interest in the business as:
·a shareholder in a company that carries on the business, or
·a partner in a partnership that carries on the business, or
·the sole proprietor of the business.
Ownership interest includes an interest held indirectly through one or more interposed companies, partnerships or trusts.[3] Ownership for this purpose includes beneficial ownership if it is evidenced in accordance with the terms of reg 1.11A of the Regulations.
[3] s 134(10) of the Act and reg 1.03 of the Regulations.
To meet cl.188.232(1) the Tribunal must be satisfied Mr Bansal had an ownership interest in the convenient store business for at least the 2 years immediately before the application was made.
DSMS Corporations Australia Pty Ltd and the 7-Eleven business
According to an ASIC search obtained by the Tribunal, DSMS was registered on 25 June 2014 and deregistered on 14 November 2021. The original shareholders and directors were Mr Deepak Kukkar and Mr Mannu Kukar who each beneficially held 1 ordinary share. On 4 May 2015, the company issued a further 98 ordinary shares with 35 allotted to Mr Kukkar, 29 to Mr Kukar and 34 to Mr Bansal. That made the shareholding:
Shareholder % Deepak Kukkar 36 Mannu Kukar 30 Aakhesh Bansal 34
In his evidence at the hearing, Mr Bansal said Mr Kukkar had another 7-Eleven business elsewhere and there was an ever-increasing dispute with him about the operation of the business they owned together. The dispute ended with the closure of the business on 31 October 2018 and its sale in December 2018. He said he has limited access to the records of DSMS with which to prove its ownership of the 7-Eleven business. The Tribunal has reviewed the evidence provided and finds DSMS acquired the 7-Eleven Store on 20 August 2019 because:
a.On 6 May 2015, Mr Kukkar signed a Heads of Agreement for DSMS to purchase the 7-Eleven store at Hoppers Crossing on a going concern basis for $1,085,000 for goodwill. A refundable deposit of $70,000 was required and the sale was conditional on the purchaser obtaining a loan of $760,000 to complete the sale and the approval of the franchisor 7-Eleven Stores Pty Ltd. The purchaser was required to pay an initial franchise establishment fee of $227,163, buy minimum stock of $45,000 and pay an application fee of $5,500.
b.The total of the amounts listed on the Heads of Agreement is $1,362,663, which is close to the amount of $1.4M Mr Bansal said at the hearing was the purchase price. He said he contributed $600,000 and the balance was covered by bank finance, which is close to the amount for finance of $760,000 shown on the Heads of Agreement.
Accordingly, the Tribunal finds Mr Bansal had a 34% ownership interest in the convenience store business while it was a 7-Eleven store from May 2015 to 31 October 2018 when the store closed pending eventual sale in December 2018 because of his shareholding in DSMS.
SBM Trading Australia Pty Ltd and the Freechoice Tobacconist business
Mr Bansal explained at the hearing he realised the venture with Mr Kukkar was not going well for him and he needed to get out of it and find a business in which he was in control. He formed SBM in 2017 for that purpose although he did not activate it until 2019.
SBM was registered on 19 August 2017. The shareholders and directors from registration are Mr Aakhesh Bansal and Mrs Renu Bansal. Mr Bansal beneficially holds 70 ordinary shares and Mrs Bansal beneficially holds 30 ordinary shares. Mr Bansal is also company secretary. SBM holds ABN 62 621 191 026 with GST registration from 19 August 2017.
Once he decided his convenience store business would become a tobacconist, he began selling such products through SBM from home, using WhatsApp to attract local customers. SBM used its active ABN and GST registration to make sales and he provided copies of his diary where he recorded the sales he made. The entries span from 3 February 2019 to 18 June 2019. Whilst the value of the weekly sales was small, he nonetheless consistently sold product throughout that period.
Based on the above findings, the Tribunal is satisfied SBM was operating the convenience store business, albeit on a limited basis, from 3 February 2019 to 18 June 2019.
The Tribunal finds SBM acquired the Freechoice Tobacconist Store on 20 August 2019 because:
a.On 2 May 2019, Mr Bansal signed a contract for SBM to purchase a Freechoice Tobacconist store at Armstrong Creek for $111,000 plus stock at valuation to a maximum of $60,000.
b.On 12 May 2019, Mr Bansal signed an acknowledgment of receiving a disclosure document and copy of the franchising code of conduct from Cigarette & Gift Warehousing (Franchising) Pty Ltd.
c.On 15 May 2019, Mr Bansal and his son Mr Yash Bansal signed a confidentiality agreement with Cigarette & Gift Warehousing (Franchising) Pty Ltd, known as Freechoice. Curiously, the agreement was provided by Mr Singh on behalf of Go Ahead Migration.
d.On 28 May 2018, Mr Bansal signed an application to lease the premises at Armstrong Creek from which the Freechoice Tobacconist store operates. Fitzroys Pty Ltd, as managing agents for the premises, wrote to Mr Bansal on 30 July 2019 advising the landlord of the premises had agreed to assign the lease.
e.Mr Bansal gave evidence settlement occurred on 20 August 2019 being the day he lodged his Subclass 188 visa application.
Accordingly, the Tribunal finds Mr Bansal had a 70% ownership interest in the convenience store business, initially as a home-based business from 2 February 2019, and later as a Freechoice Tobacconist store operated by SBM from 20 August 2019 because of his 70% shareholding in SBM.
Intervening periods
The above analysis reveals Mr Bansal ownership interest in the convenience store business was suspended for three months across 2018 and 2019 and two months later in 2019:
a.Circa May 2015 to 31 October 2018, and
b.20 August 2019 to current.
The Tribunal is unconcerned about five months in nine years because departmental policy contemplates brief periods of broken ownership interest, for example when one business is sold and another is purchased to replace it provided the business remains the same and the broken periods are short. The Tribunal is satisfied to apply policy to this because the breaks are explainable by normal commercial dealings, for example, the breakdown in the relationship with Mr Kukkar.
Accordingly, the Tribunal is satisfied Mr Bansal had an ownership interest in the nominated convenience store business at the relevant times.
Was each business relied on actively operating at the relevant time?
For Mr Bansal to meet cl.188.232(1) the Tribunal must be satisfied the convenience store business was actively operating for at least the two years immediately prior to the date of application.
The term ‘actively operating’ is not defined in the Act or Regulations. In considering whether this requirement is met, the Tribunal may consider whether the business exhibited activity of a ‘repetitive, continuous and permanent character’ at the relevant times, in which the business actively sought to generate business, in fact generated trade and custom and derived some financial gain for its activities in the relevant period: Shahpari v Minister for Immigration and Border Protection [2016] FCCA 513 at [71].
DSMS Corporations Australia Pty Ltd and the 7-Eleven business
An obvious test a business is actively operating is the level of its sales, although it is not the only test. As mentioned above, Mr Bansal does not have access to the financial records for DSMS so he can’t provide financial statements, company income tax returns and business activity statements, which would show the value of sales made to show the business was actively operating. He has some payroll documents, which provide limited evidence of active operation.
Absent financial records, the Tribunal turns to the evidence it has which includes the Heads of Agreement discussed above. It reveals the business was purchased by DSMS on a going concern basis including goodwill of $1,085,000. The Tribunal understands goodwill can be calculated as the current value of the future maintainable earnings of a business, that is, earnings after costs. To have goodwill of $1,085,000 self-evidently implies sales well above that amount.
At the hearing, Mr Bansal explained he arrived in Australia in December 2015 and commenced working in the 7-Eleven business in which he had invested A$600,000. He said the store was open 24/7 with three full-time and four to five part-time employees. The Tribunal is aware a convenience store is open to the public. The business operated from commercial premises at Hoppers Crossing in outer Melbourne.
Accordingly, the Tribunal is satisfied the convenience store business operated by DSMS was actively operating from 2 July 2015 until it closed on 31 October 2018.
SBM Trading Australia Pty Ltd and the Freechoice Tobacconist business
Mr Bansal was able to provide copies of signed financial statements for SBM for the financial years from 2019 to 2023. They reveal:
Year ended 30 June Sales (excl. GST) 2019 1,000 2020 1,263,197 2021 3,642,597 2022 4,901,540 2023 4,517,276
The Freechoice franchise commenced on 20 August 2019, which explains the steep increase in sales beginning in the 2020 financial year.
The diary records of Mr Bansal reveal sales of tobacco products during much of the period from 1 January 2019 to 30 June 2019. His submissions indicate customers were found using a WhatsApp account. The sales of $1,000 in the 2019 year were reported to the Australian Taxation Office in the BAS for SBM for the March and June quarters of 2019 and GST was remitted on those sales, which was the beginning of its fledgling business operations. Whilst those sales were modest, nonetheless there were sales during that period.
Accordingly, the Tribunal is satisfied the convenience store business operated by SBM was actively operating from 2 February 2019 and continues to do so.
Does each business satisfy the ‘main business’ definition at the relevant time?
To satisfy the requirements of cl.188.232(1), the business relied on by Mr Bansal must meet the ‘main business’ definition for at least the two years immediately prior to the date of application. The term ‘main business’ is defined in reg 1.11 of the Regulations. There are four elements to the definition, each of which must be satisfied for a business to be a main business.
Firstly, the applicant must have or have had an ownership interest in the business. ‘Ownership interest’ is defined in s 134(10) of the Act.[4] If a beneficial interest is relied on for these purposes, certain evidentiary requirements must also be met.[5]
[4] Reg 1.03.
[5] Reg 1.11A.
Secondly, the applicant must maintain or have maintained direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business.
Thirdly, the value of the applicant’s ownership interest, or the total value of the ownership interests of the applicant and the applicant’s spouse or de facto partner, in the business must meet certain thresholds:
·if the business is operated by a publicly listed company, the value of the ownership interest must be at least 10% of the total value of the business.
·if the business is not operated by a publicly listed company and the annual turnover of the business is at least A$400,000, the value of the ownership interest must be at least 30% of the total value of the business.
·if the business is not operated by a publicly listed company and the annual turnover of the business is less than A$400,000, the value of the ownership interest must be at least 51% of the total value of the business.
Finally, the business must be a qualifying business. ‘Qualifying business’ is defined as an enterprise that is operated for the purpose of making profit through the provision of goods, services or goods and services (other than the provision of rental property) to the public and is not operated primarily or substantially for the purpose of speculative or passive investment.[6]
[6] Reg 1.03.
The Tribunal has already found Mr Bansal had an ownership interest in the convenience store business firstly as a 34% shareholder in DSMS, then 70% as a shareholder in SBM. Accordingly, the Tribunal finds the first element of the main business definition is met.
The Tribunal has also found the annual turnover of DSMS was well more than $400,000 after which the turnover of the business does not matter because Mr and Mrs Bansal together hold 100% of the business as operated by SBM. Accordingly, the Tribunal finds the third element of the main business definition is met.
When he was part of DSMS, Mr Bansal said he operated the 7-Eleven store as its manager, and whilst Mr Kukkar was his co-director he played little part in managing the business as he had another store which occupied his time. Mr Bansal gave evidence he attended to all stock ordering via the 7-Eleven portal, determined all staff rostering and separately managed the gas and fuel supplies for the business. As mentioned above, the business was open 24/7 and Mr Bansal said he attended the store every day for at least one hour and up to six hours.
The convenience store business continued as a tobacconist initially with SBM making sales from Mr Bansal’s home and continued from commercial premises at Armstrong Creek once SBM purchased the Freechoice franchise. According to Mr Bansal, that store is also open seven days each week and staffed only by Mrs Bansal and him. He said they bring in some casual staff during the festive season over Christmas and New Year, otherwise only they attend to the activities of the business, including sales, stock purchasing, opening and closing, cleaning, paying bills and cleaning the shop.
By his evidence at the hearing, Mr Bansal made the decision to buy into DSMS and to exit it and he did the research which identified smoking products as the best way forward for his convenience store business. He selected Freechoice as the franchisor and contracted with them to buy the Armstrong Creek franchise.
Accordingly, the Tribunal is satisfied Mr Bansal maintained direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business.
Based on the written and oral evidence before it, the Tribunal finds the convenience store business was and is a qualifying business, because:
a.It was and is operated for the purpose of making profit as evidenced by the sales and profits shown in the financial statements of SBM and the amount paid for goodwill in DSMS,
b.It provided mainly goods and some services to the public by opening long hours from commercial premises,
c.The balance sheets of SBM show the only property as ‘Property – store’ from which it operates and none for rental or otherwise, nor any indication the business is operated primarily or substantially for the purpose of speculative or passive investment.
Accordingly, the Tribunal is satisfied the convenience store business does meet the definition of main business at the relevant times. Given the findings above, the Tribunal is satisfied that cl.188.232(1) is met. The Tribunal has also considered cl.188.232(2).
Continues to have the ownership interest in cl.188.232(1)
Clause 188.232(2) requires that the applicant continues to have the ownership interest mentioned in cl.188.232(1) at the time of this decision.
The financial statements for SBM show substantial trading continued to 30 June 2023 and the BAS for the quarter ended 31 December 2023 shows that continued to that date. The Tribunal conduced an ASIC search and found Mr and Mrs Bansal continue to hold the shares in SBM on a 70/30 basis.
Given the findings above, the Tribunal is satisfied cl.188.232(2) is met. As it has already found that cl.188.232(1) is met, it follows that cl.188.232 is met.
CONCLUSION
Given the above findings, the appropriate course is to remit the application for the visa to the Minister to consider the remaining criteria for a Subclass 188 (Business Innovation and Investment (Provisional)) visa.
The secondary visa applicants are remitted for reconsideration by the Department based on the outcome of the application by the primary visa applicant.
DECISION
The Tribunal remits the applications for Business Skills (Provisional) (Class EB) visas for reconsideration, with the direction the first named visa applicant meets the following criteria for a Subclass 188 (Business Innovation and Investment (Provisional)) visa:
·cl.188.232 of Schedule 2 to the Regulations.
Peter Ranson
Member
| Date of hearing: | 15 March 2024 |
| Type of hearing: | Teams video |
| Representative for the Applicant: | Mr Sukhwinder Singh of Go Ahead Migration |
| Interpreter: | None |
| Witnesses: | None |
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