"We closed the auction immediately, we don't want to offend anyone or go into anything that would be a defamation of character,” CEO Jaco Jonker said.
This was the second time the item had been put up for sale.
But while some may find the item, which features a picture of Malema with fist raised in the air behind a microphone humorous, Dario Milo, a lawyer from Webber Wentzel said it was possible that there could be a claim for defamation or breach of dignity in that the depiction of Malema may be argued to be humiliating and insulting.
The real question was whether the "defence of jest" would apply in circumstances such as these, he said.
"The argument would be that the depiction does not convey any factual allegation, and that a politician is expected to endure robust criticism and satirical commentary, even in crude forms such as the present case.
Line must be drawn
"There is a difficult line that must be drawn between commentary that is vulgar and yet must be tolerated in our democracy, and commentary that is deeply invasive to a person's human dignity," Milo said.
The two-ply toilet paper with Malema's face embossed on every sheet was sold for R61 on the auction website earlier this month, The Times newspaper reported on Friday.
There was only one roll on sale and it was bought by an unknown bidder.
The seller of the item was from Klerksdorp in the North West.
ANC Youth League spokesperson Floyd Shivambu refused to comment on the toilet paper.
"Don't waste my time with things that have nothing to do with the organisation (ANCYL). If it's not to do with the organisation then don't ever phone me again," he told Sapa during a phone conversation.