Sure.
A seller can cancel a listing at any time. Stuff breaks, or gets sold elsewhere, or occasionally an item is pulled by eBay because they don't allow that sort of thing. (The current 'sort of thing' is e-cigarettes.). Or the seller may not have permission to sell it which is a common problem with designer purses.
To complicate matters:
If there are active bids on an auction, if the seller does not cancel all the bids before closing it, the highest bidder is deemed to have won and should he pay for the item, the seller is required to ship. So there is more reason to inform bidders of a problem than just good manners.
Naturally, if eBay closed down the auction, this does not apply.
