Allah, exalted be His praise, says: 'And take as witnesses two just men from among you.' [Surah al-Talaq: 2]
And He said: 'And take two witnesses from among your men.' [Surah al-Baqarah: 282]
And He said: 'from among those whom you approve of as witnesses.' [Surah al-Baqarah: 282]
Imam al-Shafi'i (may Allah have mercy on him) said: "So in these two verses, and Allah knows best, there is evidence that by them Allah Almighty meant only Muslims and not others, because our men and those whom we approve of are only the people of our religion, not the polytheists, since Allah Almighty has severed the bond of allegiance between us and them on the basis of religion."
Imam al-Shafi'i (may Allah have mercy on him) said: "And how can it be permissible that the testimony of a Muslim is rejected because we know that he lies about some human being, while we accept the testimony of a dhimmi though he lies about Allah, the Blessed and Exalted?"
Imam al-Shafi'i (may Allah have mercy on him) said: "And Allah Almighty has informed us that they altered the Book of Allah, wrote the book with their own hands, and said: 'This is from Allah, in order to purchase with it a small price.' [Surah al-Baqarah: 79]"
Ubaydullah bin Abdullah narrates from Sayyiduna Ibn Abbas (may Allah be pleased with them both) that he said: O assembly of Muslims! How can you ask the People of the Book about anything when your Book, which Allah revealed to His Messenger, is the most recent of reports about Allah? You recite it pure, with no adulteration in it. And Allah has told you that the People of the Book altered what Allah had written, changed it, wrote the books with their own hands and said: 'This is from Allah, in order to purchase with it a small price.' [Surah al-Baqarah: 79] Does not the knowledge that has come to you forbid you from questioning them? By Allah! We have never seen any man among them asking you about what has been revealed to you.
Hadith Referenceالسنن الكبرى للبيهقي / كتاب الشهادات / 20613