The Karnataka High Court on Monday directed the State government not to take any coercive steps against Cineplex Private Limited in connection with the mandatory remittance of a 2 percent cess on cinema ticket revenues [Cineplex Private Limited v. State of Karnataka & others].

Justice HT Narendra Prasad also issued notice to the Karnataka Labour Department, the Karnataka Cine and Cultural Activists' Welfare Board and other respondents on a plea filed by Cineplex challenging the constitutional validity of the welfare legislation.

Advocate MG Naveen Kumar, appearing for Cineplex, submitted that the plea challenges the Karnataka Cine and Cultural Activists (Welfare) Act, 2024, which imposes a 2 percent cess on cinema ticket revenues of multiplexes.

The petitioner's counsel also brought to the Court's attention that notices had been issued by the authorities in connection with the cess.

Taking note of the submission, the Court directed the respondents not to take any coercive steps against the petitioner until the next date of hearing.

The Court further directed the government advocate to take notice for the respondents and ordered that the matter be listed along with similar petitions.

In a connected petition raising a similar challenge, the Additional Advocate General had undertaken that the respondents would not take any coercive steps against the petitioners until the next date of hearing.

The Multiplex Association of India, the Indian Broadcasting and Digital Foundation and others have also moved the High Court challenging the mandatory levy and secured interim protection against coercive action by the State government.

Cineplex has challenged the Karnataka Cine and Cultural Activists (Welfare) Act, 2024, the Karnataka Cine and Cultural Activists Social Security and Welfare Rules, 2025, and amendments introduced to the legislation in 2026.

As per the plea, the levy of a 2% cess on cinema ticket revenues is unconstitutional and State cannot impose the levy without adequate statutory authority.

The petitioner has argued that multiplexes and cinema exhibitors do not have a direct employer-employee relationship with cine and cultural activists who stand to benefit from the welfare legislation.

It has further contended that the legislation imposes an unreasonable financial burden on cinema exhibitors and that the cess is in the nature of a tax rather than a welfare contribution.

The petition has also questioned the State government's decision to impose the cess at the rate of 2 percent, despite the statutory provision permitting a rate ranging between 1 percent and 2 percent.

The matter will be heard next on November 17.