2% Cinema Ticket Cess: Karnataka High Court Records State's Assurance Of No Coercive Action Against Petitioner-Theatres; But No Stay On Act
The Karnataka High Court on Wednesday (September 30) recorded the State's assurance that no coercive action would be taken against the petitioners challenging to the constitutional validity of the 2% cess imposed on cinema tickets under the Karnataka Cine and Cultural Activists (Welfare) Act, 2024, till the next date of hearing.
However, there is no stay on the operation of the Act as of now.
Justice H.T. Narendra Prasad was hearing petitions filed by Vinayaka Chitramandira Theatre, PVR INOX and the Multiplex Association of India, challenging Sections 9(1), 9(2) and 11 of the Act, along with Rule 8(1) of the Karnataka Cine and Cultural Activists Social Security and Welfare Rules, 2025.
The Act came into force today, September 30, pursuant to the State Government's notification dated September 10, 2026.
The protection from coercive action is confined to the petitioners in the present proceedings and does not amount to a general stay or protection for all cinema theatre owners in the State.
“Learned AAG further submits that till the next date of hearing, no coercive action shall be taken against the petitioner. The said statement is recorded,” the Court noted.
The Court has granted the State two weeks' time to file its objections/reply and indicated that it would examine the constitutional validity of the impugned provisions. If the provisions are ultimately upheld, the theatre owners would be liable to pay the cess.
The petitioners have also challenged orders issued by the Labour Officer in August and sought a declaration that cinema theatre owners have no liability to pay or remit the cess under Section 9.
During the hearing, the State submitted that the impugned notice had been withdrawn.
The matter will be heard next on October 26.
Background
The petitioners contend that the levy lacks a valid taxing entry under the Constitution, arguing that Entries 23 and 24 of List III, relied upon in the Act's Statement of Objects and Reasons, concern social security and labour welfare and are non-taxing entries.
They further contend that the cess does not bear a sufficient nexus with the beneficiaries, pointing out that the Fund covers several academies dealing with fields outside cinema.
The petitioners also argue that cinema theatre employees are not recognised beneficiaries under the Act and Rules, while the cess is imposed on every cinema ticket.
The petitioners have further challenged the absence of provisions relating to assessment, returns and appeals against quantification, and contend that the Act does not specify whether the exhibitor, distributor or producer is liable to bear the levy.
Earlier, on September 10, a coordinate bench in Multiplex Association of India v. State of Karnataka had quashed identical show-cause notices and an order issued against multiplex operators after the State submitted that the Act had not yet been brought into force under Section 1(2).
The State subsequently notified September 30, 2026 as the date on which the Act would come into force.
The petitioners had sought interim protection against recovery under Section 13, penalty under Section 16, prosecution under Section 17 and action against their cinema licences.
Adv K V Dhananjay appeared for the petitioner ChitraMandira