The company is also disputing a tax bill for 36.4m, the amount Revenue claims it should have collected through the levy over the past four years. If the court challenge succeeds and Judge Michael Peart said Dunnes had an arguable case it could set a precedent.
The bag levy was introduced eight years ago as an anti-litter measure. It was originally set at 10 cents and had an immediate impact, reducing use by 80% and raising millions of euros ringfenced by government for environmental projects. But with usage now creeping back up, the tax has now more than doubled to 22 cents.
In the High Court, Dunnes noted that the levy was imposed under waste management legislation. But it contended that a plastic bag did not become waste until the holder discarded it. It also argued that the definition of the type and size of bag liable to the levy "is so uncertain as to render the regulations invalid".
The judge said the issues required a judicial review. The case is due in court again next month.