Preference of Allah to the Children of Israel and their dispute thereafter
Allah the Exalted mentions the favors He granted the Children of Israel, such as revealing the Divine Books to them, sending the Messengers to them and granting them kingship. Allah said,
(And indeed We gave the Children of Israel the Scripture, and the understanding of the Scripture and its laws, and the prophethood; and provided them with good things,) such as foods and drinks,
وَفَضَّلْنَـهُمْ عَلَى الْعَـلَمينَ
(and preferred them above the nations.) of their time,
ثُمَّ جَعَلْنَاكَ عَلَىٰ شَرِيعَةٍ مِّنَ الْأَمْرِ "Then We have put you on a certain way of the Matter (i.e. the religion)... 45:18". Here it may be borne in mind that the religion of Islam has certain fundamental articles of faith, such as the Oneness of Allah, the Hereafter and so on; and there are ordinances, laws and injunctions related to practical life. As far as the fundamental articles of faith are concerned, they are immutable and were imparted to every Prophet (علیہ السلام) and his Ummah since the inception of man. However, laws relating to practical life were different for different Prophets (علیہم السلام) and their people. The sacred laws of previous Shari'ahs kept changing according to the needs of time and exigencies of circumstances. In the verse under comment, the second type of practical laws has been described as "...a certain way of the Matter (i.e. the religion)...". The jurists, on the basis of this verse, have ruled that the Ummah of the Prophet Muhammad ﷺ must, of necessity, follow the sacred laws of the Shari'ah of the Prophet Muhammad ﷺ . As far as the sacred laws of the previous Shari` ah are concerned, this Ummah is not legally bound to them unless the Qur'an and Sunnah support or confirm them. Support or confirmation may take one of two forms, as follows: (1) the Qur'an and Sunnah may explicitly say that a certain law of a certain Prophet (علیہ السلام) must be followed by this Ummah; or (2) the Qur'an and Sunnah may speak highly and favourably about a certain law of a previous Ummah without hinting that it is abrogated for this Ummah. This indicates that the law is applicable in the Shari` ah of this Ummah also. In that case, the previous law becomes part of this Shari'ah, and as such this Ummah is legally bound to follow it. This much is sufficient for us to understand the status of the previous Shari` ahs. Details are available in the books of the Islamic jurisprudence.
According to verse 16, God exalted the Children of Israel over the peoples of the world. This parallels what was said of the people (ummah) of the Prophet Muhammad, i.e. ‘You are the best ummah (nation)’ ( 3:110 ). To make a group the bearer of the Book of God is in fact making it responsible for guidance to other nations’ and it is in this sense that the community that bears the Book is superior to all nations. In principle, the Children of Israel were commanded to convey the message to the whole world, as is now the case with the Muslims. But the Children of Israel, by introducing deviations into their Book, lost this status forever. There is always uniformity in the authentic teachings of religion. But additions to them by scholars create differences and undue complexities. Then every scholar makes additions according to his taste. Thereafter every scholar and his followers set about proving their additions to be correct and others’ additions to be incorrect. In this way, religious sects start forming and finally a stage is reached when one religion becomes divided into several religions. When the Children of Israel distorted their revealed religion, God thereupon revealed the Quran through the Prophet Muhammad. Since no other prophet was to appear after him, God caused the Quran to be preserved and kept safe by special arrangements, so that it should never again happen that the religion of God be lost in the labyrinth of human additions.
Uthmani text of the Madinah mushaf (King Fahd Complex). Translation: Saheeh International. Tafsir via Quran.com.