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CA Final · Indirect Tax Laws · Exemptions from GST

Ramesh, a farmer in Nashik, grows grapes and sells them fresh in the market. He also dries a portion into raisins in his own farm shed and sells these in sealed packets with a brand name to a retailer. Which treatment aligns with the GST exemption for agricultural produce?

Fresh grapes are exempt as unprocessed agricultural produce, but branded, packaged raisins are not covered by that exemption. The goods themselves, not the farmer's status, determine exemption, and drying and branding takes the product beyond the exempt unprocessed category.

  1. AFresh grapes are exempt as agricultural produce, while branded packaged raisins are not covered by the exemption for unprocessed produceCorrect
  2. BFresh grapes and branded raisins are both exempt, since the farmer is the producer
  3. CFresh grapes are taxable, but raisins are exempt as a processed item
  4. DBoth are taxable because a farmer selling to a retailer loses the exemption

Explanation

Fresh fruits are exempt as unprocessed agricultural produce, and supply of agricultural produce by a farmer is not tied to the buyer being a consumer. Drying grapes into raisins and packing them under a brand takes the goods beyond the exempt, unprocessed category, so the exemption for fresh produce does not extend to them. The option exempting both ignores that the nature of the goods, not the identity of the producer, decides the exemption.

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