SC rejects Nestle’s curative petition against pronunciation that India cost its Swiss MFN status

A Swiss flag flutters at Nestle’s head office in Vevey, Switzerland, November 25, 2024. | Photocredit: Denis Balibouse

All options are now closed for MNCs such as Nestlé SA, since the Supreme Court has rejected a curative petition submitted by the company against the earlier judgment on dividend tax. The statement by the Apex Court in this case had led to the suspension of the most favorite nation (MFN) by India by Switzerland.

“In our opinion, no case is submitted in the parameters indicated in the decision of this court in Rupa Ashok Hurra vs. Ashok Hurra & Anr. Reported in 2002 (4) SCC 388. Hence the curative petition is rejected,” a bank of Chief Justice’s Kant, Kant, Kant, Kant, Kant, Kant, Kant, Kant, Kant, Kant, Gustam’s Kant, Kant, VavaiTam’s side, Kant, Gustam and Gustama and Gustama and Gustama and Gustama, and Gustam, Kantam and Justice’s Kantam, and Gustama and Justice’s, Kantam and Justices. On the Petition SA. A curative petition is submitted by an approached party after requesting an assessment for re -conquering adverse decision is rejected. This is considered a final resort for the petition.

The root of the entire process chain was a ruling by the Supreme Court on October 19, 2023, in which it was considered that a Double Taxation Agreement (DTAA) cannot be enforced unless informed of section 90 of the Income Tax Act. As a result, companies such as Nestle SA (the parent company of Nestle India) and other Swiss, Dutch and French MNCs are confronted with a demand for higher taxes on dividends.

Subsequently, a Division Bank of Justices s Ravindra Bhat and Dipankar DATTA ruled that a notification on the basis of Article 90 (1) of the Income Tax Act is necessary and a mandatory condition for a court, authority or tribunal to implement a DTAA, or a protocol that has the effect of the existing the existing the general conditions. Accordingly, the Bank has taken out a couple of 11 petitions with Nestle SA as a respondent in the main request and ruled in favor of the income tax department. With this, the APEX court put the order aside by the Delhi Supreme Court.

Section 90 of the Income Tax Act prescribes tax reduction under the Double Taxation Dreidance Agreement (DTAA). It ensures that no company or individual pays income tax twice while working in a foreign country or for a foreign company.

The applicant also submitted an assessment application that was also rejected. This led to Switzerland announcing the suspension of the MFN status to India. This means increased tax obligations for Indian entities that are active in Switzerland. From January 1, 2025, Indian companies will be subject to a higher withholding tax on income generated in Switzerland.

With the aforementioned statement, the Swiss authorities acknowledged that the interpretation of paragraph 5 of the Protocol of the India-Switzerland Double Taxation Diredance Agreement (in-c-dta) is not shared by the Indian side. “In the absence of reciprocity, it is therefore due to its unilateral application with effect from 1 January 2025. For dividends, and including 1 January 2025, the remaining tax rate in the source state is limited to 10 percent,” said the Swiss authorities’s statement. However, the position adopted by the Swiss competent authority in its statement of 13 August 2021 remains applicable to income that builds up during the tax years 2018-2024.

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Published on September 26, 2025