Council officers say they are cracking down on the 'revolving door' of shopkeepers who sell smuggled alcohol and cigarettes.
On Thursday the authority's licensing committee refused to grant Shokat Ali permission to sell booze and tobacco from Double Diamond in Page Hall Road.
A report to councillors from Trading Standards said Mr Ali had previously held a licence for the shop when more than 11,000 'illicit' cigarettes were found by officers in July 2014.
The cigarettes were found to have been smuggled, and did not carry the required health warnings.
He was also licence holder in January 2016 when 1,400 illicit cigarettes were found, along with six packets of smuggled tobacco.
South Yorkshire Police also raised concerns about Mr Ali, saying he had 'failed to demonstrate an ability to operate within the law previously at this location, and the new application gives little assurance these issues would not continue'.
After the decision not to grant Mr Ali a licence, acting principal officer at Trading Standards in Sheffield John Maher said he was 'very pleased'.
"The premises is like a revolving door of ownership," he said.
"They just keep revolving it every time someone is caught out.
"The door turns and someone opens up as new, but it's business as usual."
Mr Maher said the council was targeting such operations as a priority - particularly in areas where the number of smokers is high.
"We are attacking that licence because the premises is being used to sell smuggled goods," he said.
Mr Maher said the aim was to prevent crime but also to protect children from harm, which is one of the council's licensing objectives.
The council also wants to cut the number of adults who smoke.
And both Trading Standards and police hope that by refusing to grant licenses to people with known histories of illegal activity, they can stop related issues such as tax avoidance and exploitation of illegal immigrants - although neither were associated with Double Diamond.
"It's a widespread problem for sure and our resources have to target key areas where the biggest problems are. But it exists all over."
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