Karnataka High Court Seeks State's Response To PVR INOX Plea Against 2% Cinema Ticket Cess

The Karnataka High Court has sought the State government's response to a plea challenging the 2% cess imposed on cinema tickets under the Karnataka Cine and Cultural Activists (Welfare) Act, 2024.

A bench of Justice H.T. Narendra Prasad directed the State to take notice and observed that the issue concerning the applicability of the relevant provisions would be considered after examining whether the 2024 Act has formally come into force.

The matter is listed for further hearing tomorrow.

The petitioners, Multiplex Association of India (MAI), PVR INOX Limited, and its shareholder Shantanu Pai, have challenged the Karnataka Cine and Cultural Activists (Welfare) Act, 2024, the Karnataka Cine and Cultural Activists Social Security and Welfare Rules, 2025, and the 2026 amendment to the Act.

They have also challenged various notifications, office orders, circulars and enforcement notices issued by the authorities seeking to operationalise and enforce the cess against cinema halls and multiplexes.

The petitioners' primary challenge is that the 2024 Act has not been brought into force in the absence of a valid commencement notification under Section 1(2).

They have also challenged the constitutional validity of the Act, the amendment, the Rules and the implementation measures.

The Act was enacted to provide social security to persons described as "Cine and Cultural Activists" through a Welfare Board and Fund. Section 9(2) contemplates a welfare cess of between 1% and 2% on cinema tickets, subscription fees and revenues of "Related Establishments".

The Rules subsequently fix the cess at 2% on cinema tickets of all theatres, including multiplexes, and on television entertainment channels.

The Act received the Governor's assent on September 23, 2024 and was published in the Karnataka Gazette Extraordinary on September 24, 2024. However, the petitioners state that they have not identified any notification under Section 1(2) appointing a date for the Act to come into force.

The petitioners have challenged the State's legislative competence, contending that the field relating to social security and welfare of cine workers is occupied by Parliament's Code on Social Security, 2020.

They contend that the State legislation cannot operate to the extent of any repugnancy with the Parliamentary enactment in the absence of Presidential assent under Article 254(2).

The petitioners further contend that multiplexes do not employ the Cine and Cultural Activists who are intended to benefit from the welfare scheme.

They argue that there is no clear nexus between the levy and the people who are meant to benefit from it. The plea also challenges the levy on revenues from related businesses, including food and beverage sales at multiplexes.

The petitioners have further said that the 2% cess, on top of GST and other operating costs, adds to the financial burden on multiplexes and cinema-goers. According to the plea, this could affect ticket prices, footfalls and the viability of theatrical exhibition.

They have sought a declaration that the Act has not yet come into force and asked the court to quash the measures taken to enforce the cess. They have also sought interim protection against such enforcement.

For Petitioner: Senior Advocate Uday Holla