The Gauteng liquor board has banned the use of catering permits for selling liquor.
The catering or "occasional" permit is used by someone hosting a party or special event to sell liquor.
"Liquor traders have used the catering permit to trade while waiting for a liquor licence," said liquor board spokesman Siphiwe Hlophe.
He said the catering permit was valid for seven days and not renewable.
"But people took advantage of the situation and renewed the catering permits," Hlophe said.
An internal investigation into how this happened was under way.
Hlophe said people should not use catering permits during the waiting period.
Jean Bovard, 35, of Bezuidenhout Valley in Johannesburg said he had lost his stock worth R62000 when police raided his pub and ordered him to close down because he did not have a trading licence.
Bovard had a catering licence from the Gauteng liquor board for which he paid R1000 at the South African Revenue Service. The permit was valid from June 5 until June 11 but he was raided on June 10.
"I produced the catering permit but the police ignored it and took my stock," Bovard said.
Hlophe said anyone selling liquor using a catering permit risked having his stock confiscated and the outlet closed.