The Karnataka High Court on Wednesday sought the State government's response to a petition challenging the levy of a 2% cess on cinema ticket revenues under the Karnataka Cine and Cultural Activists (Welfare) Act, 2024.

The bench of Justice H T Narendra Prasad issued notice on the plea filed by the Multiplex Association of India (MAI), PVR INOX Ltd and its shareholder Shantanu Pai.

The petitioners have challenged various circulars, office orders and enforcement notices issued by the Karnataka Labour Department directing cinema halls and multiplexes to collect the cess.

Senior Advocate Uday Holla, appearing for the petitioners, argued that the cess cannot be collected as the 2024 Act has not yet come into force. He pointed out that Section 1(2) requires the State government to issue a notification in the Official Gazette appointing the date of commencement, which, according to the petitioners, has not been issued.

The petitioners have also challenged the levy on the ground that Parliament's Code on Social Security, 2020 already covers social security and welfare measures for cine and cultural workers. They contend that the State legislation is therefore repugnant to the central law.

They have further argued that the 2% cess is effectively a tax and questioned its imposition on multiplexes that have no direct employment relationship with the workers intended to benefit from it.

The petitioners have sought quashing of the orders and notices enforcing the cess, a declaration that the 2024 Act has not come into force, and interim protection against its collection.

The matter has been listed for hearing tomorrow.