The High Court of Karnataka on Wednesday sought the State government’s response to a petition challenging the legality of levy of a 2% welfare cess on cinema ticket revenues under the Karnataka Cine and Cultural Activists (Welfare) Act, 2024.
Justice H.T. Narendra Prasad passed the order on a petition filed by the Multiplex Association of India and PVR INOX Ltd.
The petitioners have questioned the actions of the State authorities, who have recently issued a series of notices and circulars asking the petitioners to collect cess with effect from September 1 under the provisions of the Act of 2024, when the government has not yet issued gazette notification announcing the date from which the Act would come into force.
Stating that the Act of 2024 had received the Governor’s assent on September 23, 2024, and was subsequently published in the gazette, it was pointed out in the petition that Section 1(2) of the Act specifically provides that it would come into force only on a date appointed by the State government through a notification in the official gazette. And no such commencement notification had been issued to date, the petitioners claimed.
On legality of the Act, it was contended in the petition 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.
The petitioners further argued that the 2% cent levy is a “tax” in substance and does not satisfy constitutional requirements. The petitioners also questioned the reasonableness of imposing the cess on multiplexes, given they have no direct relationship with the cine and cultural workers meant to benefit.
Further hearing was adjourned till September 10.
