Imran Khan, 28, pleaded guilty to assaulting Imran Hussain in March 2017 but Judge Simon Newell ordered a trial of issue over whether his motivation was the victim's membership of the Territorial Army, according to the Lancashire Evening Telegraph.
"What you are doing is wrong, killing Muslims," Khan told Hussain during an initial confrontation in a Subway sandwich shop in Blackburn, Lancashire, a town in northern England with a large Asian population.
Hussain, who left the service in November 2016, told the court he believed he had been targeted because of his role in the Army.
Khan said he himself had considered joining the armed forces and said he had a cousin in the army.
Judge Newell ruled that Khan was not "an honest witness" and "manipulated the facts to his own advantage" and he ruled that the army was the main reason for the attack.
Khan will be sentenced on February 14, along with Shabaz Khan, 26, and Jabbar Khan, 28, who admitted to using threatening behaviour.