Opposition to the proposal was spear headed by the council's deputy mayor Bill McClenaghan.

Cr McClenaghan said the inclusion of a function centre was inappropriate for the area.

"A cinema, hotel or shop does not belong in a rural zone," Cr McClenaghan said.

Cr McClenaghan listed six reasons why the motion was refused including effect to the rural character of the area, inappropriate to farm users and inconsistent with water catchment.

"We have to ensure the rural amenity is not effected," he said.

"The only option we have is to refuse it."

The applicant David Stagg said he would take the decision to VCAT as soon as he received the report from council.

He said the proposed development was basically the same as a winery.

"A winery allows you to have sale of food including alcohol," he said.

"A function room is the same as a winery as far as I'm concerned."

One of council's planning officers said the use was much like a winery which would require a permit for producing the cider, selling bottles of cider and a restaurant which may involve entertainment and liquor.

Cr McClenaghan said the decision to refuse the application took council a lot of time.

"We could have said yes to the whole lot or no. In the long term the result may be the same," he said.

Mayor Heather Mutimer, as Coliban ward councillor, fully supported Cr McClenaghan.

The application received 10 objections from seven households.

Assessments were carried out by Goulburn Murray Water, Department of Sustainability and the Environment, Country Fire Authority and council's environmental health officer who had no particular concerns with the proposal.

Cr McClenaghan's refusal was seconded by Birch ward councillor David Smith.