All avenues of appeal have been exhausted, and the consequences are now locked in place.
When India's Supreme Court closed the final door on Nestlé's curative petition in September 2025, it did more than settle a corporate tax dispute — it crystallized a deeper tension between domestic legal interpretation and the international architecture of trade. The court's insistence that tax treaties must be formally notified under Indian law before they carry legal force has redrawn the boundaries of bilateral trust, prompting Switzerland to withdraw preferential trade status it had long extended in good faith. What began as a technical question about dividend taxation has become a parable about how nations negotiate the terms of mutual benefit, and what happens when those terms are read differently on either side of a border.
- India's Supreme Court dismissed Nestlé's curative petition — the absolute last legal remedy available — leaving the company with no further recourse against a ruling that dramatically increased its tax liability on Indian dividends.
- The original 2023 ruling sent shockwaves through multinational corporations from Switzerland, the Netherlands, and France, who suddenly found that the tax treaties protecting them were deemed unenforceable without formal Indian government notification.
- Switzerland responded with a pointed diplomatic countermove, suspending India's Most Favoured Nation trade status and raising withholding taxes on Indian companies' dividends to 10 percent starting January 1, 2025.
- Indian corporations operating in Switzerland now face a harsher tax environment going forward, while income earned between 2018 and 2024 remains under the older, lower rates — a partial reprieve that does little to soften the long-term blow.
- The rupture raises an unresolved question: whether India and Switzerland can renegotiate the terms of their bilateral relationship, or whether this legal finality will permanently alter how multinationals calculate risk in both countries.
India's Supreme Court has shut the final chapter on Nestlé's long legal battle over dividend taxation, dismissing the company's curative petition — the last remedy available under Indian law. A bench led by Chief Justice B R Gavai, joined by Justices Surya Kant, Vikram Nath, and Dipankar Gupta, found no grounds to reopen the case, writing simply that "no case is made out."
The dispute traces back to October 2023, when the Supreme Court ruled that Double Taxation Avoidance Agreements cannot be enforced in Indian courts unless the government has formally notified them under Section 90 of the Income Tax Act. For Nestlé and other multinationals from Switzerland, the Netherlands, and France, this was not a technicality — it meant that treaties they had relied upon for years were suddenly unenforceable, exposing them to substantially higher taxes on dividends from their Indian subsidiaries. Nestlé challenged the ruling through a review petition and then a curative petition, both of which failed.
The consequences extended well beyond the courtroom. Switzerland, viewing India's legal interpretation as a unilateral rewriting of their bilateral treaty, announced in August 2024 that it would suspend the Most Favoured Nation status it had granted India. Effective January 1, 2025, Indian companies in Switzerland lost their preferential tax treatment, now facing a 10 percent withholding tax on dividends — a meaningful increase from prior rates. Swiss authorities were direct: without reciprocity, they would no longer apply preferential terms unilaterally.
For income earned between 2018 and 2024, the older rates still apply, offering limited relief. But the path forward is steeper. With every legal avenue exhausted and diplomatic relations strained, the central question is no longer about Nestlé — it is about whether India and Switzerland can rebuild the framework of trust that this ruling has quietly dismantled.
The Supreme Court of India has closed the final door on Nestlé's legal challenge to a taxation ruling that has upended the company's operations and strained India's relationship with Switzerland. On September 26, a bench led by Chief Justice B R Gavai dismissed what is known as a curative petition—the last possible recourse in the Indian legal system—rejecting Nestlé SA's attempt to overturn an earlier court decision on how dividend taxes should be calculated. With that dismissal, all avenues of appeal have been exhausted, and the consequences that rippled outward from the original ruling are now locked in place.
The chain of events began in October 2023, when the Supreme Court issued a sweeping decision about how international tax treaties work in India. The court ruled that a Double Taxation Avoidance Agreement—a treaty designed to prevent companies from being taxed twice on the same income—cannot actually be used in court unless the Indian government has formally notified it under Section 90 of the Income Tax Act. This sounds technical, but it had immediate and severe practical consequences. Companies like Nestlé, along with other multinational corporations from Switzerland, the Netherlands, and France, suddenly found themselves facing demands for substantially higher taxes on dividends they received from their Indian subsidiaries. The treaties they had relied on for years were, in the court's view, legally unenforceable.
Nestlé fought back. The company filed a review petition asking the court to reconsider. That petition was also dismissed. Then came the curative petition—a rare and difficult remedy available only when a party believes a court has made a fundamental error of law or procedure. The bench of four judges, including Justices Surya Kant, Vikram Nath, and Dipankar Gupta, found no grounds to reopen the case. "In our opinion, no case is made out," they wrote, using language that left no room for further argument.
But the real damage had already been done, and not just to Nestlé. Switzerland, responding to what it saw as India's unilateral reinterpretation of their bilateral tax treaty, took action. The Swiss government announced in August 2024 that it was suspending the Most Favoured Nation status it had granted to India. MFN status is a cornerstone of international trade law—it means that one country agrees to treat another country as well as it treats any other country. Losing it is a significant blow. Effective January 1, 2025, Indian companies operating in Switzerland would no longer receive preferential tax treatment. Instead, they would face a withholding tax of 10 percent on dividends and other income, up from the lower rates that had previously applied.
The Swiss statement, issued by the country's competent tax authority, was pointed. Switzerland acknowledged that India did not share its interpretation of the tax treaty. "In the absence of reciprocity," the Swiss authorities said, they were withdrawing their unilateral application of the preferential terms. For income that Indian companies had earned between 2018 and 2024, the old rates would still apply—a small mercy. But going forward, the higher rate would be the rule.
For Indian corporations with operations in Switzerland, the impact is tangible and retroactive in some respects. They now face higher tax bills on income generated in Switzerland, and the preferential treatment they once enjoyed has been revoked. The Supreme Court's decision, upheld through every level of appeal, has effectively rewritten the terms of one of India's most important bilateral tax relationships. Nestlé's dismissal marks the end of the legal battle but not the end of the fallout. The question now is whether India and Switzerland can find a way to restore the relationship, or whether this rupture will reshape how multinational corporations calculate their tax exposure in both countries.
Notable Quotes
In the absence of reciprocity, it therefore waives its unilateral application with effect from 1 January 2025.— Swiss tax authorities, August 2024
The Hearth Conversation Another angle on the story
Why does it matter that a tax treaty needs to be formally notified under Section 90? Couldn't companies just use the treaty anyway?
Because in India's legal system, a treaty is only binding in court if it's been formally incorporated into domestic law through that notification process. Without it, the treaty exists on paper but has no force in a tax dispute. The court essentially said: you can't rely on something that hasn't been made part of Indian law.
So Nestlé lost years of preferential treatment because of a procedural requirement?
Not just Nestlé—any multinational from those countries. But yes, the ruling retroactively called into question tax positions companies had taken in good faith for years. That's why Switzerland responded so sharply.
What does losing MFN status actually mean for Indian companies?
It means they lose the "most favoured" treatment. Instead of the lower tax rates the treaty promised, they now pay the standard rate—10 percent withholding on dividends. It's a direct financial hit, and it signals that Switzerland sees India as having broken the bargain.
Could this damage India's ability to negotiate other trade deals?
Potentially. When a country suspends preferential status over a tax dispute, it sends a message to other trading partners about how India interprets agreements. That kind of uncertainty makes negotiations harder and more expensive.
Is there any way back from this?
Only if India and Switzerland can reach a new understanding about how the treaty should work. But with the Supreme Court's ruling now final, India would have to either formally notify the treaty under Section 90 or negotiate a new agreement. Neither is quick or easy.