Utah's Restaurant Association and the Utah Taxpayers Association sued over the tax in 2010, arguing that it violates equal protection provisions of the Utah and U.S. constitutions by unfairly levying different tax rates on the same goods, depending on where they were purchased.
Twenty-seven of Utah's 29 counties impose the tax, which generates about $34 million annually to help governments promote tourism, build convention centers and fund an array of community arts, culture and recreation programs.
In court papers, attorneys for the restaurant and taxpayers associations argued that businesses selling the same goods for the same purpose immediate consumption should be treated equally and said retail stores get an unfair advantage under the law.
Kennedy disagreed, saying that despite some overlap in the types of products sold, or the competitive nature of the prepared foods market, the association had failed to prove it had been harmed or that the law presents an unreasonable burden.
Kennedy conceded that the classification in state law that defines the different types of establishments isn't perfect "some retail establishments might be excluded that could logically be included and some restaurants could be included that could logically be excluded."
Still the judge said the classification is not discriminatory.