Mahlaba, a medical doctor who was sworn in as mayor in February, was remanded in custody for more than a week after his arrest in March.
According to reports, Mahlaba took the decision to step down as mayor to save the image of the ANC.
Meanwhile, police said they could not provide any details of progress into the murder case of ANC party member Martin Sithole who was gunned down, along with his friend Buthanani Golden Shange, in Newcastle on May 12.
Soon after the murders it emerged that Sithole had been a witness in a high-profile Newcastle murder case.
National police spokesperson Brig Vishnu Naidoo told TimesLIVE that a decision had been taken to release information of cases being investigated by the political task team every two to three months.
"In all these cases we cannot release information about the progress because, whether it is politically motivated or not, people's lives are at risk. Every time we come out and say something we find that people are being killed. We have since adopted this approach of releasing information every two or three months and found that it works better that way," said Naidoo.