The government withdrew the appeal pending in the court of Chief Justice A M Khanwilkar and Justice R B Misra against the promoters of Himalayan Ski Village, Advocate General Shrawan Dogra said.
The project is being promoted by Alfred Ford of the Ford Motor Company near Manali in Kullu district of Himachal Pradesh.
"The ball is now in the court of the promoters and they have to decide whether to go ahead with the project or not," Chief Secretary S Roy said.
But the then BJP government subsequently moved the appeal citing another HC judgement that banned construction activity in the Kullu-Manali region on grounds that the area fell in eco-sensitive zone.
The present Congress government has already clarified that the company could go ahead with the project, provided it gets fresh clearances, including the environment impact assessment report.
The Himalayan Ski Village project envisaged building world class ski area and construction of five-star hotel chalets with an investment of Rs 1,581 crore.