PVR, multiplex chains challenge Karnataka's 2% cinema cess in court

The multiplex operators have questioned the legal validity of Karnataka's decision to levy a 2% cess on cinema admissions, arguing that the state lacks authority to impose the tax through its current mechanism. The petitioners contend that any such levy must follow proper statutory procedures and cannot be collected until the enabling law is officially gazetted and comes into force.

The Multiplex Association, representing major cinema chains operating across Karnataka, joined PVR INOX in filing the challenge before the high court. The operators have raised concerns that the cess would increase the financial burden on cinema halls already grappling with operational challenges in the post-pandemic recovery phase.

The high court has sought a detailed response from the Karnataka government on the legality and implementation timeline of the proposed cinema cess. The court's directive signals that the state will need to justify the tax's constitutional validity and clarify the procedural framework under which it intends to collect the levy.

The outcome of the case could have significant implications for cinema operations across Karnataka and potentially set a precedent for similar taxation measures being considered in other states. The multiplex industry has been advocating for tax rationalization, arguing that additional levies impact ticket prices and consumer demand at a time when cinema attendance is still recovering to pre-pandemic levels.