Innocent has lost its fight on VAT charges on smoothies.
The tax tribunal ruling came after Innocent challenged its tax bill by arguing its smoothies were "a liquefied fruit salad" rather than a "beverage".
The company claimed it was unfair that the government charges 17.5% VAT on its 100% fruit smoothies, when a bowl of the raw ingredients are not subject to VAT.
The dispute dates back to April 2007 when Innocent, partially owned by Coca-Cola, first tried to claim back VAT on three years worth of smoothie sales.
However, a tax tribunal has ruled the Treasury was within its rights to refuse a refund on Innocent's "healthy" products, despite the lack of VAT on a raft of junk food, including burgers and chips.
Innocent founder Richard Reed referred to the ruling as "crazy".
"This ruling is definitely not in the interest of the nation's health,@ he said.
"It is absurd that smoothies, which contain two portions of fruit and help people live more healthily, are subject to VAT at a full rate when junk food like burgers, chips and doughnuts are sold tax-free."
Innocent is Europe’s top smoothie player (11 September 2010)
Asda fights VAT with smoothie discounts (13 September 2008)
Innocent and Asda vow to keep fighting on VAT (12 May 2008)