The development, proposed for the former Oliver's on Clyde restaurant site, included a 24-hour car wash, Hungry Jacks outlet and a licensed restaurant.

Earlier this year, resident Kathryn Faulkner and husband Mark co-ordinated a petition against the development, collecting more than 150 signatures.

While welcoming the knockback, Ms Faulkner said the fight had only begun, as she expected the developer would appeal to the Victorian Civil and Administration Tribunal.

"We will keep the pressure up and try to attend the hearing if it goes to VCAT next year," Ms Faulkner said.

Casey's planning committee rejected the application because it didn't comply with "relevant requirements" of the planning scheme. In a written report, officers recommended refusing a permit on grounds including it was an overdevelopment of the site of the former Oliver's on Clyde restaurant.

"The proposed development will adversely impact on the amenity levels of surrounding residential properties by increasing noise levels, traffic, light spillage, off-site car parking and reducing landscape buffers to roads and to adjoining residential properties," the report said.