When the comedy was released in 1979, the local authority said its 15 rating should be upped to an 18. The film's distributors refused and the movie was effectively banned and never shown in the resort, reports The South Devon Herald Express.
The film recently won a vote to be shown at the English Riviera International Comedy Film Festival, forcing Torbay Council to seek legal advice on the ruling made three decades ago. It was subsequently decided that the 1979 decision is now redundant.
A council spokeswoman said it had been made "to protect the people in Torbay" who had voiced some opposition at the time.
"The council do not have those powers anymore and therefore the decision relating to the previous screening of the film is void," she said.
Torbay mayor Nick Bye said: "The world has moved on. I haven't seen the film but I welcome its showing on Sunday."