Karnataka HC quashes notices demanding 2% cess from movie tickets as govt. admits that law is yet to be enforced

The High Court of Karnataka on Thursday quashed the circulars and notices issued by the regulatory authorities asking the multiplexes and cinema theatres to collect 2% welfare cess with effect from September 1 under the provisions of the Karnataka Cine and Cultural Activists (Welfare) Act, 2024, as the State government admitted that the Act itself is yet come into force.

Justice H.T. Narendra Prasad passed the order while allowing the petition filed by Multiplex Association of India and PVR INOX Ltd.

Earlier, the government informed the court that notices were withdrawn on September 9 while admitting that gazette notification announcing the date from which the Act would come into force, was yet to be issued.

The petitioners had challenged the legality of issuance of circulars and notices when the Act itself had not come into force as the government had not notified the date giving effect to the Act after it had received the Governor’s assent on September 23, 2024, and was published in the Gazette.

As the petitioners had also challenged the legality of the Act, the court said that examination of the legality of the Act would not arise at this stage as the Act is yet to be enforced while reserving the liberty to the petitioners to challenge the legality of the new legislation as and when it comes into force.

The petitioners had contended that the State legislature lacked competence to impose the cess as Parliament had already enacted the Code on Social Security, 2020, which occupies the field relating to social security of workers, including cine workers.