District Police Chief, DSP Zahari Mohamed said the police raided the outlet about 8pm in town after two weeks of surveillance.
Zahari said all the 16 "call girls" failed to produce valid identification documents and permits.
Police also confiscated the shop's trading licence as well as a ledger book which recorded all the premise's revenues that also included "ladies drinks" charged by the girls.
"All suspects as well as confiscated items were brought to the police station for further investigation under Section 372B of the Penal Code which carries a jail term of not more than one year or fine or both," he said.
Based on preliminary investigation, Zahari said police found that the centre has been operating as a restaurant that also sold alcoholic beverages.
"The ledger shows how much these call girls are charging for their ladies drink and indicated that, while under the guise of waitresses, they also offered sex to their customers," he said.
The call girls were living in an apartment located just above the restaurant.
According to Zahari, police are currently monitoring on several other clubs and pubs in town that are suspected running the same modus operandi, and similar raid will be taken once enough evidence are acquired.