No Coercive Action Against TV Broadcasters Challenging 2% Cinema Cess

BENGALURU: The Karnataka High Court on October 28, 2026, directed the State Government not to take coercive steps against television broadcasters who have challenged the 2% cess imposed under the Karnataka Cine and Cultural Activists (Welfare) Act, 2024. Justice H.T. Narendra Prasad passed the interim direction in the writ petitions filed by the Indian Broadcasting and Digital Foundation, JioStar India and Zee Entertainment Enterprises.

Along with the levy, the petitions challenge the September 10, 2026 notification by which the State brought the Act, as amended in 2026, into force with effect from September 30, 2026. The protection against coercive action will operate while the challenge is pending. The Court ordered the broadcaster petitions to be listed with the connected matter filed by the Multiplex Association in W.P. No. 30670/2026.

In effect, the State cannot start recovery, penalty or other enforcement proceedings against the three petitioners for non-payment or non-compliance linked to the disputed cess. The Court did not decide the validity of the levy. That question will come up after the State files its response and the tagged petitions are heard together.

Broadcasters say collection model does not fit

At the hearing, the petitioners focussed on the method of collection. They said that as television broadcasters, they do not collect subscription fees directly from viewers. Signals pass through distribution platforms and local operators before reaching homes, and the payment made by the subscriber is not received at the broadcaster's end in the way a ticket is sold at a cinema counter.

Their case is that compliance with certain provisions of the Welfare Act is not possible for them for that reason. They pointed in particular to Sections 2(o), 9 and 11 of the Act. Section 2(o) contains a definition clause, while Sections 9 and 11 deal with the machinery for levy, collection and compliance. The broadcasters said these provisions assume a direct collection from the viewer or patron, which does not happen in broadcasting.

According to counsel, a broadcaster fixes the price of a channel and offers it to distribution platform operators, but has no direct transaction with the household that watches the channel. The amount paid by that household moves through intermediaries, with each link in the chain retaining its share under contracts governed by the telecom and broadcasting regulatory framework. In that setting, the petitioners argued, asking the broadcaster to collect and deposit a 2% cess from viewers would fasten a liability without a matching collection mechanism.

Beyond machinery, the petitions question legislative competence and classification. The challenge is to the constitutional validity of the cess so far as it is sought to be applied to broadcasters. The Court will have to examine whether the State law, described as a welfare measure for cine and cultural activists, can extend to television broadcasting, and whether the provisions for assessment and payment can work for entities placed differently from cinemas, multiplexes and other exhibitors.

Court tags pleas with multiplex challenge

Justice Narendra Prasad stopped short of staying the Act or the notification itself. The direction was confined to protection against coercive steps against the petitioners before the Court. Such interim orders are common where a new levy is challenged soon after it is brought into force. The court holds the position on the ground while it examines whether the levy can be sustained in law.

Listing the broadcaster petitions with W.P. No. 30670/2026 matters in practice. That petition has been filed by the Multiplex Association and raises its own challenge arising from the same statute and notification. Hearing connected petitions together lets the Court look at the scheme of the Act as a whole, the definitions it uses, and the different collection machinery said to apply to cinemas on the one hand and broadcasters on the other.

A joint hearing also avoids conflicting interim directions. If exhibitors and broadcasters were heard separately, there could be divergent views on how the cess operates, who must collect it, at what stage it attaches, and how it is to be remitted to the welfare fund. One set of proceedings lets the State place its full defence at once and allows all affected segments to address the Court on the same sections.

The September 10, 2026 notification fixes the timeline. By that notification, the State appointed September 30, 2026 as the date on which the Act, as amended in 2026, would come into force. The broadcaster petitions were filed within weeks of that date. The petitioners pressed for an early interim direction before any demand or penalty could be raised against them.

Tax and regulatory lawyers say the first weeks after a new cess is enforced are often the most contentious. Departments prepare demand formats and inspection routines, while assessees seek clarity on registration, returns and payment. An order of no coercive action holds that process in abeyance for the petitioners without expressing a view on the merits. The State remains free to file its statement of objections, produce records on the framing of the levy, and explain how it proposes to collect the cess from different categories.

Interim shield while validity is tested

For JioStar India and Zee Entertainment Enterprises, the interim direction means broadcast operations in Karnataka can continue without the immediate threat of enforcement tied to the 2% cess. For the Indian Broadcasting and Digital Foundation, the industry body for broadcasters and digital platforms, the order protects the member category before the Court. The protection is personal to the petitioners and flows from the order passed in their writ petitions.

The statute itself remains untouched. Sections 2(o), 9 and 11 stay on the statute book. The September 10 notification also remains in operation. What the Court has done is to restrain the use of coercive machinery against these petitioners until the constitutional challenge is decided. If the petitions fail, the question of payment for the interim period will arise under the orders then passed. If they succeed in whole or in part, the Court will define how far the Act can apply to broadcasters.

Much will turn on the language of the three provisions cited by the petitioners. Definition clauses decide who falls within a levy. Collection provisions decide who must collect, when the liability arises, and how the amount moves from the viewer to the fund. Compliance provisions deal with books, returns, inspection and penalties. The petitioners' point is that all three assume a direct interface with the paying public. The State, in response, will have to show how those provisions can be read to cover broadcasting, or whether rules to be framed under the Act will supply a workable method.

The Act creates a welfare fund supported by the cess and is titled as a measure for cine and cultural activists. The State is likely to defend the levy as a fee or contribution linked to entertainment activity in Karnataka and to argue that broadcasters, who transmit films and cultural content for viewing in the State, form part of that activity. The broadcasters, in turn, are likely to argue that a welfare levy must still meet the tests of legislative authority, intelligible classification and a rational method of collection.

The broadcaster petitions will now come up with W.P. No. 30670/2026 filed by the Multiplex Association. The State Government will be expected to file its objections, place the notification and the amended provisions before the Court, and explain its stand on enforcement against broadcasters as distinct from cinema exhibitors. The interim direction against coercive steps will continue in the meantime, and no separate application for extension will be needed unless the Court varies the order on a later date.