Despite a Department for Infrastructure civil servant approving plans for the facility in 2017, the decision was overturned after the High Court ruled the project had been given the go-ahead unlawfully.
This ruling has now been upheld following a challenge by the Department of Infrastructure.
Sinn Féin MLA, Declan Kearney, welcomed the news.
"This decision is another vindication and another victory for local democracy, campaigning residents and the primacy of the Good Friday Agreement," he said.
"Approval should never have been granted for this facility in the first place given the widespread opposition and concerns over the safety of residents. The decision to appeal the original verdict was also wrong and it's time that the Department started listening to the courts, local communities and political representatives.
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"Further to my engagement with other political representatives, local campaigners the Department Permanent Secretary earlier this week, I am calling on the Department of Infrastructure to accept this verdict and do the right thing by withdrawing its support for permission to proceed with this incinerator.
"The Court was very clear that it would be contrary to the Good Friday Agreement for such a significant and controversial decision to be taken by departmental officials in the absence of an Executive."
Sinn Féin Meath West TD, Peadar Tóibín, said the decision could pave the way for a legal case to be taken against planning permission granted for the North South Interconnector, a major energy project to link both Northern Ireland's and the Republic of Ireland's electricity networks.
"This ruling gives a strong precedent and its now likely that a legal case will be taken against the planning approval given on the North South Interconnector," he said.
"The North South Interconnector is important to the development of the island but it must be undergrounded.
"Currently Fine Gael and the Independents seek to construct 409 pylons – some of them up to 51m high – carrying 400,000V through Meath, Cavan, Monaghan, Armagh and Tyrone.
"Some will be constructed at a minimum distance of 13m from people's houses. With regards, tourism, heritage, agriculture and communities the current plan with radically damage these counties.
"There is also serious health concerns and home and property values would be damaged. It is both technically and financially feasible to underground this interconnector and that's what the government must do.
"Serious questions must now be asked of the Minister for Communications, Climate Action and the Environment who has already started procurement process for the building of the Interconnector before the full planning process is fully complete.
"The Minister's decision may put the state on the hook financially for a project that may still not be built."
(LM)
