Mustafa Haji Mahamed, who runs Alverthorpe Mini Market in Wakefield, insisted it would "never happen again".
The shop has been banned from selling alcohol after the authorities found 173 packets of illegal cigarettes at the premises, on Alverthorpe Road, in July this year.
Speaking at a public licensing hearing on Tuesday, Mr Mahamed said he'd been trying to sell the shop earlier this year, but a deal with a prospective buyer had fallen through.
Footage from the store's cameras played to the hearing had earlier shown customers being handed the tobacco in exchange for cash over the counter.
Mr Mahamed said: "I'm very, very sorry.
"It's not taken place since and I can promise you it won't take place again.
"I know it's illegal. I should know better. I put my hands up and I honestly do apologise."
However, Mr Mahamed strongly denied several other allegations made by the police and licensing officers from Wakefield Council.
These included claims counterfeit tobacco had been found in his car in 2019, during an investigation into a neighbouring store with which he was also involved.
He also rejected a suggestion that he breached rules by selling high-strength lager to a shopper in 2018 and that the CCTV in his shop had not been recording for a period of time this year.
However, West Yorkshire Police solicitor Sam Ponniah said there'd been an "institutionalised cutting of corners" within the store.
He told the hearing: "What is of particular significance is that Mr Mahamed was fully aware these are counterfeit cigarettes.
"Past behaviours is a relevant indicator of future behaviours.
"Mr Mahamed has not met the police or the licensing authority halfway on any of these issues.
"We'd suggest there's no other option but the revocation of the licence, because the likelihood is at some point further down the line we'll be back here again."
Health experts say counterfeit cigarettes are dangerous to smokers, because their contents are unregulated and thus unknown.
They are typically sold for less than half the price of a legitimate packet and it's estimated they con the British taxpayer out of millions in VAT every year.
After a 45 minute recess, a panel of three local councillors decided to revoke the shop's alcohol licence.
Local Democracy Reporting Service