The man and woman at Free Choice Tobacconist in Bondi Junction were each found guilty of 36 tobacco-related offences, which carry a fine of $1000 per count.

They are also banned from selling tobacco at their store until August 2018.

The combined penalties are the biggest ever in NSW for tobacco-related offences under the Public Health (Tobacco) Act 2008.

The fines were handed down at Waverley Local Court in August.

A tip-off by a member of the public prompted inspectors from South Eastern Sydney Local Health District (SESLHD) Health Unit to pay the store a visit earlier this year.

Inspectors have the power to seize from stores tobacco products that don't have the correct health warnings or original packaging.

Fifty per cent of the fines will be paid to the Department of Health.

Director of the Public Health Unit at SESLHD, Mark Ferson, said the fine should serve as a clear warning to proprietors who flout tobacco laws.

"This is a huge amount of money for two people owning a small business. It sends a very important message to other retailers," Professor Ferson said.

The unit has seized cigarettes without health labels from about 10 retailers in the area since March, he said.

People selling illegal tobacco were feeding the heavy burden of disease due to smoking, he said.

"This is because it is often sold more cheaply than legal tobacco and does not have health warnings."

Sellers were avoiding paying tax on the cigarettes and selling them at discounted prices, which could offer smokers an added incentive to buy them.

"It's really important cigarettes are sold in plain packs with health warnings," Professor Ferson said.

"There is evidence that making cigarette packs look very boring and putting graphic images on them reduces people's interest in smoking, particularly young people," he said.

Each year, smoking kills an estimated 15,000 Australians and costs Australia $31.5 billion in social, health and economic costs, according to government data.

Australia was the first country to introduce such strict packaging requirements - in December 2012.

A review of plain packaging found that in combination with graphic health warnings, the measure was associated with an estimated drop in smoking prevalence of about 0.55 percentage points between December 2012 and September 2015, after controlling for a range of variables, including excise tax increases since 2010, and socio-demographic factors.

The decline equates to about one-quarter of the total drop in prevalence, and 108,228 fewer smokers over the review period.

Public health experts say the effects of Australia's packaging laws on smoking rates are likely to be evident in the long term.

People can confidentially report suspected breaches of the act to the Public Health Unit on 9382 8333 or the Tobacco Information Line on 1800 357 412.