Yogesh Patel, who owns Emma's General Store in Dukinfield, Manchester, was facing a review of his licence after a covert police operation investigating underage drinking in the area.
Greater Manchester Police claim they had evidence to support a case against Yogesh, but he believes the evidence centres on hearsay from those who hold a grudge since being banned from his store. He adds that he has not failed any Trading Standards test purchases.
Yogesh told Convenience Store: "I've been made a scapegoat for trouble and in the end I decided I didn't want the hassle of selling alcohol."
He added: "The police say they have evidence that alcohol was bought in my store and given to underage kids, but how am I supposed to know exactly what's going on outside? The law doesn't seem to protect retailers at all. It'll be obvious I wasn't the cause of trouble because the anti-social behaviour will continue."
Inspector Vincent Greener from Greater Manchester Police said: "With the help of the community we traced back to where we suspected they obtained the alcohol."