The 2,043-square-meter club would have been the first beach location for the club globally.
"The Playboy club's application for setting up the facility in beach shack would be rejected as shack licences are usually given to individuals and not to the companies", Parrikar told the Assembly.
Technically, it is not possible for the state government to grant license to Playboy Club, the chief minister said.
In India, Playboy magazine and similar publications are banned. The adult entertainment brand operates more than forty Playboy Clubs worldwide.
The Playboy club, a chain of nightclubs and resorts, had applied to set up its facility in a beach shack at Candolim beach as per its business plan to open 120 clubs, bars and cafes in India by 2022.
PB Lifestyle, the Indian arm of the worldwide venture, had also worked out on the Playboy bunnies and was in the process of training six of them in India and about the country's sensibilities.
US-based designer Mohini Tadikonda had designed on the iconic costume, adding long drapes of chiffon to the bottom half. The upper half -- the satin bustier -- remains tight and revealing.
To satisfy the country's obscenity laws, the PB Lifestyle had said the traditional bunny outfit with bodices, bow ties, bunny ears and bunny tails would be tamed.
However, the proposed venture faced stringent opposition, spearheaded by BJP MLA Michael Lobo, who alleged that the club will promote "vulgarity" and threatened hunger strike if the enterprise is allowed to operate in the state.
Tourism Minister Dilip Parulekar said today that there had been a lot of discussion on promotion of vulgarity once Playboy club is set up. "We all are aware of how prostitution is rampant in the coastal belt", he said.
Parulekar said that the application was received in the name of Playboy club to build a beach shack and was submitted to the government by former MLA Agnelo Fernandes.
"As per the state government's shack policy, one can not approve applications in the brand name; one has to apply in his name", Parulekar explained.
The department has given permission for 350 shacks on the government land and 600 in private properties.
With PTI inputs