Cess Levied On Cinema Tickets U/S 3C Of Kerala Local Authorities Entertainment Tax Act Is Constitutionally Valid: Kerala High Court
The Kerala High Court has stated that cess levied on cinema tickets under Section 3C Of Kerala Local Authorities Entertainment Tax Act is constitutionally Valid. “Cess can also mean a tax levied for a special purpose or as an increment to the existing tax and, in given circumstances, a fee. In the case at hand, entertainment tax is already levied under the Act of 1961 and the...
The Kerala High Court has stated that cess levied on cinema tickets under Section 3C Of Kerala Local Authorities Entertainment Tax Act is constitutionally Valid.
“Cess can also mean a tax levied for a special purpose or as an increment to the existing tax and, in given circumstances, a fee. In the case at hand, entertainment tax is already levied under the Act of 1961 and the Cess under Section 3C is an additional levy. Thus, the contention of the Assessee that under Entry 62 of List II of Schedule VII to the Constitution of India, only tax can be levied, and Cess cannot be levied is without merit” stated the Division Bench of Chief Justice Nitin Jamdar and Justice S. Manu.
In this case, the assessee has questioned the constitutional validity of Section 3C of the Kerala Local Authorities Entertainments Tax Act.
Section 3C, was inserted into the Kerala Local Authorities Entertainments Tax Act, 1961, by the State of Kerala through the Kerala Local Authorities Entertainments Tax (Amendment) Act, 2013, for levy of a Cess on the cinema tickets.
The assessee has filed writ petition seeking a declaration that the incorporation of Section 3C in the Kerala Local Authorities Entertainments Tax Act, 1961 is unconstitutional, void and inoperative.
Assessee submitted that the Cess levied under the impugned provision for a fund created by the State Government being unconnected with cinema and entertainment is not valid in law.
It was further submitted that the State does not have legislative competence to enact the impugned provision. As stated in the Counter of the State, the impugned provision will not fall within Entry 33 of List II, Schedule VII to the Constitution of India. It is not provided under any entry in the State List.
The bench observed that the impugned levy is on entertainment. The Cess levied under Section 3C of the Act of 1961 and collected is for the Kerala Cultural Activists' Welfare Fund, established under the Act of 2010. This Cess shall not exceed ₹3/- per cinema admission where the ticket price is more than ₹25/-. The local authority has to collect the Cess along with the tax on cinema admission and, after deducting the collection charges at a rate specified by the Government, has to transfer the proceeds to the Kerala Cultural Activists' Welfare Fund Board.
The bench further opined that “the Cess is levied on the cinema viewers and not on the theatre owners. The impugned provision seeks to levy a cess on the ticket purchased by cinema viewers for the purpose of entertainment, and, therefore, it is clearly relatable to entertainment under Entry 62 of List II, VII Schedule to the Constitution of India.”
The Cess can be traced to the legislative power of the State Government to Entries 62 and 66 of List II, Schedule VII to the Constitution of India, and the levy of this Cess is relatable to the benefits received by the cinema viewers on whom the Cess is levied, added the bench.
In view of the above, the bench dismissed the appeal.
Case Title: The Kerala Film Exhibitors Federation v. State of Kerala
Case Number: WA NO. 2300 OF 2015
Citation: 2025 LiveLaw (Ker) 115
Counsel for Petitioner/ Assessee: K. Ramakumar and S.M. Prasanth
Counsel for Respondent/ Department: Advocate General K. Gopalakrishna Kurup and K.R. Deepa