Supreme Court agreed on Thursday to hear a petition seeking the cancellation of this weekend's Indian Grand Prix because organisers have allegedly not paid entertainment taxes for the 2012 event.
"We will hear the petition tomorrow," Chief Justice P. Sathasivam said in court, announcing a new legal snag for Formula One in India which has been dogged by problems since the inaugural 2011 event.
India's Supreme Court has executive powers and ordered organisers two years ago to freeze 25 per cent of ticket revenues until they had settled a tax dispute with the state where the racetrack is located.
That ruling came in response to a Public Interest Litigation (PIL) filed by campaigner Amit Kumar, who is also behind Thursday's petition seeking the cancellation of the race on Sunday.
Kumar successfully argued in 2011 that Formula One was entertainment, not sport, and should not benefit from tax exemptions granted by the state of Uttar Pradesh, which borders the capital New Delhi.
Entertainment tax, applicable for large-scale shows and sponsored festivals, has been levied on tickets this year.
Formula One supremo Bernie Ecclestone had already removed India from the 2014 schedule for "logistical" reasons, leaving the future of the event at the US dollars 450 million Buddh International Circuit in doubt.
Red Bull driver Sebastian Vettel was expected to seal the world title in Sunday's race.