A request to review the premises licence at Agbrigg Stores on the corner of Agbrigg Road and Westerman Street was made by West Yorkshire Police, which was put before Wakefield Council's licensing committee recently.
It was heard that a police investigation was lunched in October last year after it was found that the store, run by Mr Khalil Mohammed Mustafa, was dealing in illicit cigarettes.
A follow up by Trading Standards and Wakefield Council found further counterfeit items.
In total, they recovered 22 packets of cigarettes and two packs of rolling tobacco.
The CCTV was also reviewed from the store's hard drive which the police say was adjusted to hide the illegal activity taking place.
Illegal cigarettes are often made in unlicensed labs and are often even more dangerous than standard cigarettes. They usually contain no health warnings - which are required by law- and no tax is paid on them, meaning shops often sell them at a lower price to willing customers.
The application to take action against Agbrigg Stores was supported by Wakefield Council's licensing enforcement officer, Paul Dean, who said: "The illegal activities demonstrate that Mr Mustafa has shown little to no regard.
"Most notably, the storage and sale of tobacco being made available to the public at discounted prices."
Trading Standards' Noreen Akhtar added: "By selling non-compliant cigarettes at less than half the normal retail price, reducing the incentive for smokers to cut down and quit smoking, the store is failing in its licensing objective to protect public safety.
"Dealers in cheap and illicit tobacco reap the financial benefits at the expense of legitimate retailers by providing unfair competition to shop selling the genuine tax-paid products. The supply of illicit tobacco costs the tax payer £2.5 billion in lost revenue per year."
The licensing committee considered the evidence during a recent meeting and a decision was made to revoke the licence.
An appeal against this decision can be made within 21 days of the notification of the decision.
It is not the first time the premises licence holder has been in trouble, having been hit with a £100 fine recently for failing to disclose where he disposes of his trade waste.