A wheatgrass juice supplier is the latest company to challenge tax officials over the classification of its product as a beverage, which means it is subject to VAT.

Tonic Attack, which sells its products online, has appealed to the VAT Tribunal claiming the juice is not designed to be drunk to "slake thirst", "increase bodily liquid levels", or "give pleasure" - the three characteristics that define a beverage under tax law.

Company MD Oliver Dowding said he had originally been advised verbally by Her Majesty's Revenue & Customs in March 2005 that the wheatgrass juice would be classed as a food and would be exempt from VAT, but the decision was later reversed in writing.

Dowding, who is being represented by London accountancy firm Smith & Williamson, said he was challenging the decision because wheatgrass juice was expensive to produce, and VAT would force the price so high it would become commercially unviable. "Tonic Attack is a food," said Dowding. "Not a single customer has said they drink it to quench thirst. For one thing, it's not the taste of the century. If you put it next to strawberry juice or chocolate I know which one people would go for."

This is not the first time HMRC has faced a legal challenge over VAT on drinks. Earlier this year, Unilever successfully argued its Knorr Vie Shots should be classed as a food.

More recently, however, smoothie bar franchise Kalron lost a similar case.Innocent Drinks is lobbying the government to cut VAT on juices and smoothies to 5%, though it has previously ruled out legal action.