Can the composition dealer sell GST exempt goods? If yes/no under which section/rule?

Reply— Yes, therer is no restriction for a composition dealer to supply Exempted goods, however a taxpayer registered under composition scheme cannot supply goods on which GST is not leviable i.e. liquour, petrol etc. 

A trader of goods registered as a composition dealer in GST is not required to pay GST on sale of Exempted goods.  Refer notification no. 01/2018 (central tax) dated 01.01.2018.

However in case of manufacturer of goods he needs to pay 1% tax on total turnover (taxable as well as on exempted)

 If a composition dealer is engaged in supply of Exempted goods, while filing CMP-08, details is to be given in column 3 (1) Outward supplies (including exempt supplies).