Opulent Life Church and its supporters, including the Texas-based Liberty Institute, claimed several restrictions in the ordinance were unconstitutional because they are unequally applied to churches.
In January, Mills has denied the church's request to stop the city from enforcing part of its zoning ordinance. The church appealed.
While the case was on appeal, the city enacted a revised ordinance that banned churches from operating in the central square
In September, a 5th U.S. Circuit of Appeals ruled against the city and sent the case back to Mills for consideration of an injunction.
The panel said the church showed it had outgrown its present location and the Holly Springs' ordinance and its revision "frustrates Opulent Life's religious mission."
The Liberty Institute said due to zoning restrictions, the church must get the approval of 60 percent of nearby residents and the town's mayor before they can expand. No other type of business in Holly Springs must obtain such approval.
The city contended the church had other avenues available, such as asking for a variance from the ordinance, before filing suit. Until those avenues are exhausted, the city contended the issue should not be before the courts.