Mughal sarai, the historical building which now houses the offices of Surat Municipal Corporation, was built during the reign of Mughal Emperor Shah Jahan in 1644 AD as a ‘sarai’ or ‘musafarkhana’ (rest house) for travellers. At that time, Surat was the main port of departure for pilgrims in Mecca. Mughal Sarai was used as a halt by the Haj pilgrims. Durong the 18th century, this building was used as a jail. Since 1867 AD, it has been occupied by the local administration. The building depicts a skilful composition of various parts with harmonious combination of arches, cornices, decorated parapets, sculptured patterns on the exterior façade, etc. in an artistic and effective manner. Its sound foundation has ensured that the structure remains intact even today.

The detail description about the sarai was inscribed on two marble stones each 3.65 m long which were being placed at its entrance gateway itself till middle of the 19th century. But later on they were negligently dumped in one of the rooms of this sarai and were left unattended for quite long time. Thanks to the efforts of Mr. A.D. Banerjee; an officer of Archaeological Survey of India, that these inscriptions were transferred to the Prince of Wales Museum of Bombay in 1929 and history of MugalSarai could thus be preserved there.

The description was inscribed in the Arabian script by Mohammed Amin of Mashahad, the translation of which was published in 1925-26. According to these inscriptions it was stated that though this building was built as sarai during the rule of Emperor ShahJahan in the name of Almighty Allah it was in fact believed to be a heaven during those days. In the last line of the script the year of construction of the sarai was also mentioned.

Emperor Shah Jahan used to give the entire revenue earned from the Surat port to his daughter JahanAra in order to meet her daily expenses. The management of this income was being done by Hakikat Khan who also became the chief officer of the Surat city from 1640 and during that tenure itself he built this sarai (1644). It is said that he had built it on the basis of same planning principles as that for sarais of Esfahan.

Later on the MugalSarai was handed over by the government for using as a Municipal Office complex in the year 1864 at the instance of the then President of Surat Municipality Mr. T.C, Hope and it was then renovated at a substantial cost. The clock tower at its entrance was added after this only.

The offices of Surat Municipality were shifted to this monumental building in the year 1867. Since then it is used for the same purpose by SMC and the area in which this building is located is still known as 'Mugalisara'.