SA Express had its air operator's certificate (AOC) suspended by the South African Civil Aviation Authority (SACAA) with immediate effect.
Nine of the 21 aircraft in the airline's fleet were grounded as a result.
The SACAA cited safety risks as the reason after it identified multiple findings of non-compliance of airline maintenance organization.
The airline was also begin investigated by the government for a questionable deal with a company linked to Gupta, Trillian Capital.
According to SACAA, SA Express will have to reapply for an AOC, as well as aircraft maintenance organization approval and airworthy certificates for the grounded aircraft, should it wish to resume operations.