The Supreme Court refused to stay the Tamil Nadu government new act permitting the bull-taming sport Jallikattu, which was banned in 2014.
The apex court also agreed to hear a plea filed by the Animal Welfare Board (AWB) against the law.
The court allowed the Centre to withdraw its last year's notification and instead issued a notice to the Tamil Nadu government validating the new law. The state government has been given six weeks to respond to it.
The government faced the court's censure for letting people defy its order and not taking control of the law and order situation. Thousands of people protested across the state against the Supreme Court law banning the sport.
"Tell your government that law and order is primacy in civilised society and we can't tolerate such incidents," the court told the lawyer representing Tamil Nadu.
Animal rights activists earlier moved the court challenging the validity of the Bill that was passed in haste by the Assembly, allowing the sport to be held.
The state and central government held urgent consultations about allowing the sport as people had become frustrated that a tradition, that is considered an integral part of Tamil culture, was being trampled on.
Animal rights activists argued that the sport was cruelty to bulls, who were enraged to the point of being violent, while being enclosed in a space and surrounded by people.
The AWB said the law was illegal and unconstitutional in its plea file to the Supreme Court.
Tamil Nadu Assembly passed the Bill on January 23 and the Ordinance was approved by the President on Monday. The Supreme Court also did not put a stay on it on Tuesday making it a temporary reprieve for them.