Chopra (Migration)

[2024] AATA 3690

Chopra (Migration) [2024] AATA 3690 (24 September 2024)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Mr Sunil Chopra
Mrs Harleen Chopra
Ms Ishita Chopra
Master Armaan Chopra

CASE NUMBER:  2201316

HOME AFFAIRS REFERENCE(S):          BCC2019/6370065

MEMBER:Susan Hoffman

DATE:24 September 2024

PLACE OF DECISION:  Perth

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

Statement made on 24 September 2024 at 9:15am

CATCHWORDS

MIGRATION – Business Skills (Provisional) (Class EB) visa – Subclass 188 (Business Innovation and Investment (Provisional)) – Business Innovation stream – ownership interest in main business – annual turnover above AUD 500,000 – tax collection commission disregarded – qualifying business – decision under review affirmed           

LEGISLATION

Migration Act 1958, ss 65, 134
Migration Regulations 1994, Schedule 2, cl 188.225; rr 1.03, 1.11

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 20 January 2022 to refuse to grant the applicants Business Skills (Provisional) (Class EB) visas under s 65 of the Migration Act 1958 (Cth) (the Act).

2. The applicants applied for the visas on 29 November 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 Regulations). The primary criteria must be satisfied by at least one applicant. 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, the first named visa applicant (‘the applicant’) applied for the visa in the Business Innovation stream.

3. The delegate in this case refused to grant the visas on the basis that the applicant did not satisfy the requirements of cl 188.225 of Schedule 2 to the Regulations because the delegate was not satisfied that the applicant had an ownership interest in one of the two nominated businesses and was not satisfied that the annual turnover of the other was above AUD 500,000 in two of the four years before the invitation to apply for a visa was made.

4. The applicants appeared before the Tribunal on 1 August 2024 to give evidence and present arguments. The applicant lodged a submission on 21 August 2024. A second hearing was held on 19 August 2024.

5. Both hearings were conducted with the assistance of an interpreter in the Punjabi and English languages.

6. For the following reasons, the Tribunal has concluded that the decision under review should be affirmed.

   CONSIDERATION OF CLAIMS AND EVIDENCE

7. The applicant is seeking to satisfy the primary criteria for a Subclass 188 visa in the Business Innovation stream which include the criteria in Subdivisions 188.21 and 188.22 of Schedule 2 to the Regulations. The issue in the present case is whether the applicant meets cl 188.225.

   Ownership interest in main business – cl 188.225(1)

8. Clause 188.225(1) requires that for at least 2 of the 4 fiscal years immediately before the time of invitation to apply for the visa, the applicant had an ownership interest in one or more established main businesses that had an annual turnover, in each of those years, of at least AUD500,000 (if the time of invitation was before 1 July 2021) or at least AUD750,000 (if the time of invitation was on or after 1 July 2021). No more than two businesses can be nominated for this purpose (reg 1.11(2)). ‘Fiscal year’, in relation to a business or investment, means, if there is applicable to the business or investment by law an accounting period of 12 months – that period; or in any other case – a period of 12 months approved by the Minister in writing for that business or investment: reg 1.03.

9. The businesses relied on by the applicant as identified in their visa application form to satisfy these requirements were as follows:

   ·     Chopra Motor Products – retail – sale of tyres and provision of related services such as wheel balancing, alignment, installation and repairs, located 422 Truck Stand behind Bumra filling station, Amritsar.

   ·     Sunil Chopra (sole trader) – motor vehicle government tax receipts, driving school, receipts from motor vehicle pollution centre, receipts from photostat and commission receipts, located at 89 Krishna Square, Amritsar.

10. Accordingly, the Tribunal must consider the nature of the applicant’s interest in these businesses and whether they met the definition of ‘main business’ for at least 2 of the 4 fiscal years immediately before the time of invitation to apply for the visa, as well as the annual turnover of the businesses in the relevant year.

    Did the applicant have an ownership interest in each business relied on for at least 2 of the 4 fiscal years immediately before the time of invitation?

11. 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;

    including such an interest held indirectly through one or more interposed companies, partnerships or trusts (s 134(10) of the Act and reg 1.03 of the Regulations). Ownership for this purpose includes beneficial ownership if it is evidenced in accordance with the terms of reg 1.11A of the Regulations.

12. In order to meet cl 188.225(1) the Tribunal must be satisfied that the applicant had an interest of this kind in the relevant business or businesses for at least 2 of the 4 fiscal years immediately before the time of the invitation. The time of the invitation was 6 November 2019.

13. In the visa application form, the applicant identified 2017 and 2018 as the best two of the last four fiscal years. Generally, the fiscal year in India runs from 1 April to 31 March. The applicant submitted a number of tax returns with an end date of 31 March. The Tribunal is satisfied that two relevant fiscal years ended on 31 March 2017 and 31 March 2018.

14. The applicant provided evidence of him being a partner in Chopra Motor Products with his brother Mr Anil Chopra and that it has been a 50/50 partnership since 19 January 2011.

15. The applicant provided a franchise agreement between MRF Tyres and Service and Chopra Tyres dated 13 January 2017. The document identified MRF Limited as a public limited company and a franchisor. Chopra Tyres, the franchisee, was described as a partnership with the applicant and Mr Anil Chopra being the partners.

16. The applicant also provided a letter from the Bank of Baroda dated 30 October 2021 which identified the applicant and Mr Anil Chopra as being the partners in Chopra Tyres.

17. The documents included financial statements for Chopra Tyres which stated that Chopra Tyres was formally known as Chopra Motor Products. These financial statements included profit and loss statements and balance sheets for years ended 31 March 2018, 31 March 2019, 31 March 2020 and 31 March 2021. Those for 2018 were identified as being actual figures, whereas those for 2019 were estimates and for 2020 and 2021 were projections.

18. The documents also include a Registration Certificate issued by the government of India which stated that Chopra Tyres is a partnership. The certificate was issued on 15 December 2018.

19. The Tribunal finds that the applicant is a partner in the business known as Chopra Motor Products which changed its name to Chopra Tyres. It accepts that the partnership was registered on 19 January 2011, and therefore is satisfied that the applicant had an ownership interest in Chopra Motor Products/Chopra Tyres for the four fiscal years prior to the visa application being made.

20. The Tribunal then considered the evidence in relation to the applicant operating as a sole trader.

21. According to the post-hearing submissions, the applicant’s sole trader business was undertaking the following activities under the following trading names:

    Chopra Motors            Motor vehicle government tax receipts

    Receipts from photostat

    Commission receipts

    Chopra Motors Driving Training School

    Chopra Motors Pollution Check

22. A letter from the chief manager of the State Bank of India identified the applicant as being the proprietor of the firm known as Chopra Motors.

23. A letter from the Office of the Regional Transport Officer, Amritsar dated 11 June 2024 referred to the Sonu Motors Driving Training School and that the proprietor of the firm was the applicant.

24. The applicant also provided a licence dated 10 March 2005 which allowed for the establishment of a driving training school. The license holder was recorded as Sonu Motor Driving Training School and was valid between 10 March 2005 and 9 March 2006. It was annotated as being renewed a number of times, up to 9 March 2020.

25. In his submissions, the applicant identified the driving school as being called Chopra Motors Driving School but submitted documents for Sonu Motors Driving Training School.

26. The applicant said that Sonu was his nickname. The Tribunal notes that financial statements were submitted for year ended 31 March 2016 and later years for the applicant as a sole trader. They clearly record income from a car driving school. That being the case, the Tribunal accepts that the applicant has operated driving schools since at least the 2015-16 fiscal year.

27. The applicant also submitted a list of Pollution Under Control (PUC) centres and the types of vehicles they checked for pollution. Some check centres tested only diesel vehicles while other checked petrol, LPG and CNG vehicles. Chopra Motors was included in the list of pollution check centres.

28. In India, the government has set emission standards for vehicles. Vehicle owners are required to obtain a PUC certificate that shows their vehicle complies with the law. The Indian government authorised certain businesses to operate as PUC centres. These are generally businesses which were already involved with motor vehicles such as filling stations or a business that repairs vehicles and has a workshop.[1]

    [1] The Tribunal has gathered and confirmed this information from numerous sites across the internet.

29. The applicant provided tax returns for himself which recorded income from business. The Tribunal is satisfied based on the tax returns and the applicant’s evidence more broadly about his business involvement, some of which is detailed below, that he operated as a sole trader and the main activities of the business were associated with vehicles.

30. Accordingly, the Tribunal is satisfied that the applicant had an ownership interest in the nominated businesses for at least 2 of the 4 fiscal years immediately before the time of invitation to apply for the visa.

    Did each business relied on have sufficient annual turnover?

31. In order to meet cl 188.225(1) the Tribunal must be satisfied that the relevant business or businesses had an annual turnover, in each of the 2 fiscal years identified above, of at least AUD 500,000 (if the time of invitation was before 1 July 2021) or at least AUD 750,000 (if the time of invitation was on or after 1 July 2021).

32. As the time of invitation was 6 November 2019, the relevant businesses must have achieved annual turnovers of at least AUD500,000 for two of the four fiscal years ended 31 March 2016, 31 March 2017, 31 March 2018 and 31 March 2019. The applicant identified 2017 and 2018 as two years where the turnover was at least AUD 500,000.

33. As set out in the departmental policy guide (the guide), turnover is the revenue generated as a result of the ordinary activities of a business, and consists of such things as the sale of goods, fees for services provided, commission earned and interest earned. The guide also mentions capital gains and government subsidies as being included in turnover.

34. The guide sets out that revenue does not include amounts collected on the part of third parties such as sales tax or goods or services tax; or amounts collected on behalf of another body such as travel agents being paid the cost of airfares which the travel agent then passes onto the airline. The travel agent will earn commission on the transaction and it is that amount – the commission - which represents revenue for the travel agent and can therefore be included in the turnover figure.

35. The Tribunal is not bound by departmental policy. It does, however, agree with the guide’s explanation of what is meant by turnover. 

36. The delegate set out the turnover for the partnership (Chopra Motor Products/Chopra Tyres) to be as follows for the two relevant years:

    2017    INR 19,536,558  AUD 392,700

    2018    INR 13,655,085  AUD 273,391.

37. The applicant submitted that the exchange rate was 50.00 INR (Indian rupees) to 1 AUD. The delegate used an exchange rate of 49.7493 for 2017 and 49.9471 for 2018. If an exchange rate of 50.0000 INR to 1 AUD was used, the results would be AUD 390,731 for 2017 and AUD 273,101 for 2018.

38. The Tribunal is satisfied that the exchange rate used by the delegate is more accurate than that submitted by the applicant, but the practical of effect of using one over the other has no bearing on the outcome of this review.

39. As requested at the first hearing, after the first hearing the applicant submitted tax returns and supporting documents that appeared to show the turnover of the sole proprietor business for the relevant years, to be as follows:

    2017    INR 28,949,092  AUD 581,899

    2018    INR 39,274,283  AUD 786,317

40. However, on closer examination of the figures, it was apparent that these figures included money collected for the government which was then passed on to the government. The business earned commission for conducting this activity.

41. For example, the 2017 financial statements recorded income from the motor vehicle tax receipts of INR 28,253,462 and payments to the government’s motor vehicle tax department of exactly the same amount. The commission earned on this activity during 2017 (included in the figure of INR 28,949,092) was INR 386,780.

42. After adjusting for the money collected on behalf of the motor vehicle tax department, the turnover for 2017 was INR 695,360 (INR 28,949,092 less INR 28,253,462), or AUD 13,977.

43. The commission earned for collecting the motor vehicle tax in 2018 was INR 522,000. After making a similar adjustment for 2018 as just set out for 2017, the turnover was INR 82,900 (INR 39,274,283 less motor vehicle tax receipts of INR 38,445,583). The turnover in Australian currency is therefore AUD16,597.

44. Combining the turnovers of each business results in the following:

    Sole proprietor AUD       Partnership AUD               Total AUD

    2017  13,977  392,700   406,677

    2018      16,597  273,391   289,988         

45. Accordingly, the Tribunal is not satisfied that the nominated businesses together had an annual turnover, in either 2017 or 2018, of at least AUD 500,000.

46. The Tribunal reviewed the figures for the four years, being years ended 31 March 2016, 2017, 2018 and 2019, and formed the view that the 2017 and 2018 fiscal years were the best years of the four, consistent with the visa application. The Tribunal asked the applicants about this, and they confirmed that 2017 and 2018 were the best years of the four.

47. The father submitted that if the Tribunal relied on the monies banked, which was apparent from bank statements he had submitted, they would show that the turnover was more than AUD 500,000. The Tribunal has already discussed why monies collected on behalf of a third party is not the same as turnover, as those monies are passed onto the third party. They generate an income (turnover) for a business through commission earned or fees charged for performing that collection service.

48. The father also asked what the difference was between him buying and selling tyres and receiving money for the motor vehicle tax from customers. The main difference is that a business buys tyres from a supplier and then sells them to the public, and that is where the gross profit is made. With the motor vehicle taxes, the customers had to pay that tax to the government but rather than pay it directly to the government, they paid it to the business – which was acting as the government’s agent – and the business passed it on. The service being provided by the business was to collect the taxes and pass them on, and the business was paid for providing the service. Other services provided by the sole trader business included driving lessons.

49. The Tribunal observes that if the business purchased tyres and sold them for the same price, such that they made no profit on the sale, the income from the sale would still be turnover. In that case, the goods or services being provided is easily identifiable as being the provision of tyres. In relation to the motor vehicle tax, the service being provided by the business was the collection of the tax on behalf of the government and passing the monies onto the government. The business was paid for providing that service through payment of a commission/fee which was INR 386,780 (AUD 7,774) for 2017 and INR 522,000 (AUD 10,451) for 2018.

50. The Tribunal also considered whether either or both of the nominated businesses met the criteria to be found to be main businesses.

    Did each business relied on satisfy the definition of ‘main business’?

51. The business or businesses relied on by the applicant to satisfy cl 188.225(1) must also have been an established ‘main business’ for the relevant 2 fiscal years identified above. 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.

52. 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: reg 1.03. If a beneficial interest is relied on for these purposes, certain evidentiary requirements must also be met: reg 1.11A.

53. 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.

54. 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 businesses is not operated by a publicly listed company and the annual turnover of the business is at least AUD400 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 AUD400 000, the value of the ownership interest must be at least 51% of the total value of the business.

55. 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: reg 1.03.

56. The Tribunal has already found that the applicant has an ownership interest in each of the nominated main businesses.

57. Turning to the third element, the turnover in each of the relevant years for the business operated by the partnership was less than AUD 400,000. The applicant confirmed that the partnership was not operated by a publicly listed company.

58. As recorded above, the turnover of the partnership was AUD 392,700 for 2017 and AUD 273,391 for 2018.

59. Given that level of turnover, for the partnership’s business to meet the definition of a main business, the applicant must have had at least a 51% share of the business. As his ownership interest in the partnership was 50%, the business operated by the partnership does not meet the criteria to be a main business of the applicant.

1. However, the sole trader business, which is owned solely by the applicant, does meet the third element. From this point, the Tribunal will only consider the sole trader business.

2. Turning to the fourth element, a ‘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: reg 1.03.

3. The Tribunal has already recorded that the sole trader business was undertaking the following activities under the following trading names:

   Chopra Motors           Motor vehicle government tax receipts

   Receipts from photostat

   Commission receipts

   Chopra Motors Driving Training School

   Chopra Motors Pollution Check

4. It is self-evident that these are services provided to the general public and are operated to generate a profit. The fourth element is met.

5. The Tribunal then considered the second element. As recorded earlier, the applicant provided a licence dated 10 March 2005 which allowed for the establishment of a driving training school which was annotated as being renewed a number of times. The bank statements for Chopra Motors record that the account was opened on 25 April 2007.

6. During the course of the hearings, the Tribunal asked the applicant for clarification on a number of points, and he answered in a manner that demonstrated he was well acquainted with the operations of the business and the different types of trading activities that formed part of his sole trader business.

7. The Tribunal was satisfied based on the many documents before it, and the evidence given by the applicants at the hearings, that Mr Chopra had maintained direct and continuous involvement in the management of the business from day to day, and in making decisions affecting the overall direction and performance of the business. That fact that he was the sole proprietor of the business indicates this.

8. Accordingly, the Tribunal is satisfied that one of the nominated businesses, being the sole trader business, does meet the definition of main business for at least 2 of the 4 fiscal years immediately before the time of invitation to apply for the visa.

9. However, satisfying the second element does not assist the applicants in meeting cl 188.225(1), as the Tribunal has found that the turnover was less than AUD 500,000 for each of 2017 and 2018. The Tribunal is also satisfied turnover was less than AUD 500,000 for 2016 and 2019, based on the available evidence and the applicants’ confirmation at the second hearing that 2017 and 2018 were the best years.

10. The Tribunal observes that even if the combined turnovers of both the partnership and the sole trader business were considered, the threshold amount of AUD 500,000 is not met for the relevant years.

11. In summary, the turnover for 2017 from the sole trader business was AUD 13,977 and for 2018, it was AUD 16,597.

12. Given the findings above, the Tribunal is not satisfied that cl 188.225(1) is met.

13. Therefore, the Tribunal is not satisfied that cl 188.225 is met.

CONCLUDING PARAGRAPHS

1. At the hearing, the Tribunal informed the applicants that it was of the view that the turnover threshold was not met, and that the partnership business did not meet the definition of a main business.

2. The applicants spoke about the impact an unfavourable decision would have on the family, in particular, upon the children and their education. The parents also spoke about how hard they have worked since coming to Australia, and the difficulties they would face if they had to return to India. 

3. The Tribunal is not unsympathetic to the applicants’ situation. However, it has to apply the legislation and for reason already explained, the Tribunal is not satisfied that the criteria for grant of Subclass 188 visas are met.

4. Given the above findings, the Tribunal finds that the criteria for the grant of a Subclass 188 (Business Innovation and Investment (Provisional)) visa are not met. Accordingly, the decision under review must be affirmed.

   DECISION

5. The Tribunal affirms the decisions not to grant the visa applicants Business Skills (Provisional) (Class EB) visas.