Tax applicability on sale of agricultural produce

[Rajat Gupta]

Hello, one of my clients is registered under GST as a trader. He also has an agricultural land to his name. He produces mustard seeds (falls under 5% slab) and takes them to the grain market for auction through kaccha arhatia. The agent issues a Form J to him showing the particulars of the buyer, seller and underlying goods.

My query is, can he be said to be an agriculturist in terms of GST law to the extent of his produce and consequently avail exemption from paying tax on such sale?

Note: Form J is normally issued by an arhatia to the farmer who brings his produce in the grain market.

AI Summary

Agriculturist exemption under GST applies to self-produced agricultural mustard sold through mandi, despite Form J documentation.
The status of an agriculturist under GST is activity-specific and applies only to cultivation of land by own, family, or supervised hired labour. A registered trader who cultivates mustard on his own land may claim agriculturist status only for that self-produced crop, and sale of such agricultural produce in primary market form remains exempt from GST. The involvement of a kaccha arhatia and issuance of Form J do not change the nature of the supply, but the exemption is confined to self-produced agricultural output; other trading activity remains taxable in the ordinary course.