The councillor, the tobacco shop and a booming black market

A regional NSW councillor manages a tobacco shop that sells illegal cigarettes as experts warn the crisis is deepening outside major cities.

An ABC investigation has found that NSW town Muswellbrook, with a population of just 16,000, has at least six shops selling illegal tobacco, including the one linked to the councillor.

Muswellbrook Council has declined to conduct its own investigation and has referred the ABC to its code of conduct, which states that it is the "personal responsibility" of council officials to behave appropriately.

A New South Wales regional councillor is managing a tobacco shop, which the ABC has found sells illegal cigarettes.

Rohit Mahajan was elected as a councillor in the Upper Hunter town of Muswellbrook in 2024.

Council disclosure documents state he is the manager of TSG Muswellbrook.

The ABC was able to purchase illegal cigarettes from the shop for just $15 on April 30.

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Rohit Mahajan has listed on council disclosure documents that he is also a manager at the TSG in Muswellbrook. (Supplied)

Asked by the ABC last month about the situation, Cr Mahajan said he had "no option" but to sell the illegal product.

"Too many shop [sic] is opening in that area. [What] we gonna do if we don't sell that kind of cigarette? We can't survive."

The TSG tobacco station in Muswellbrook is managed by Rohit Mahajan and owned by his brother-in-law. (ABC News: Alex Turner-Cohen)

Cr Mahajan told the ABC he became involved in politics because of his interest in the government's tobacco excise policy, initially sending a few letters to ministers and members of parliament lamenting that it made it difficult for small businesses to thrive.

Despite only having about 16,000 residents, ABC News can reveal the town is home to at least six shops with a supply of illicit tobacco, after visiting each shop and walking away with a pack of cheap cigarettes.

When the ABC contacted Muswellbrook Council, a spokesperson said that it was "not the regulatory authority" and suggested referring the matter to police.

Muswellbrook Council referred ABC News to its code of conduct, pointing out a line stating that it is the "personal responsibility" of council officials to behave appropriately, and declined to carry out its own investigation.

Cr Mahajan has also submitted plans to open a 100-place, $1.9 million childcare centre in Muswellbrook.

Experts say tobacco is becoming a bigger problem in regional NSW. (ABC News: Sean C Murphy)

He works at Muswellbrook TSG and also