PVR, Multiplex Association challenge 2% cess; Karnataka HC seeks state reply

PVR INOX and the Multiplex Association have challenged Karnataka's 2% cinema cess, saying it cannot be collected before the law officially comes into force

The Karnataka High Court on Wednesday sought the state government's response to a petition challenging the levy of a 2 per cent cess on cinema ticket revenues under the Karnataka Cine and Cultural Activists (Welfare) Act, 2024, Bar and Bench reported.

 

Justice HT Narendra Prasad issued notice to the state on a petition filed by the Multiplex Association of India (MAI), PVR INOX Ltd and its shareholder Shantanu Pai.

 

The petition challenges a series of recent circulars, office orders and enforcement notices seeking to implement the 2024 law, which provides for a cess on cinema revenues and earnings of "related establishments".

 

Petitioners question validity of cess collection

 

The petitioners have argued that the state cannot collect the cess through administrative orders when the parent Act has not formally come into force, the news report said.

 

 

The court said the issue of whether the relevant provisions of the 2024 Act can be enforced would be considered after determining whether the Act itself has come into effect. The state government's counsel accepted notice on behalf of the respondent authorities. The matter has been listed for hearing on Thursday.

 

The petitioners have challenged the 2024 Act, the Karnataka Cine and Cultural Activists Social Security and Welfare Rules, 2025, the 2026 amendment to the Act, and various notifications, office orders and enforcement notices issued by the Labour Department.

 

No commencement notification issued, says plea

 

Senior Advocate Uday Holla, appearing for the petitioners, told the court that Section 1(2) of the Act clearly states that it would come into force only from a date notified by the state government in the Official Gazette. Holla argued that no such notification has been issued so far. He questioned how the state could demand the cess through a circular without first bringing the law into force, the news report said.

 

“The notification itself has not been passed. Now they have issued a circular demanding the amount without the Act coming into force,” Holla submitted, as quoted by Bar and Bench.

 

The petitioners said the Act received the Governor's assent on September 23, 2024 and was later published in the Gazette. However, they said that publication of the legislation is different from issuing a notification specifying its commencement date.

 

A March 10, 2026 notification appointed authorities under the Act and Rules. An April 8 office order then directed officials to create awareness about the law and collect the 2 per cent cess from cinema halls, including multiplexes. Enforcement notices were later sent to multiplexes seeking payment of the cess, which is intended to support cine workers.

 

An August 29 circular also directed theatres and multiplexes across Karnataka to collect an additional 2 per cent on cinema ticket prices from September 1.

 

Petition challenges state's power to impose cess

 

The petitioners have challenged the 2 per cent cess on legal and constitutional grounds. They said the Centre’s Code on Social Security, 2020 already covers welfare and social security for workers, including those in the cine and cultural sectors, the news report said.

 

The petitioners also said the cess is effectively a tax and does not meet constitutional requirements. They questioned its levy on multiplexes, which may not directly employ the workers who would benefit from it. They said the cess, along with GST, could affect multiplexes’ business viability, and have sought a stay on its collection.