The customer wants to take the order back?  What does it mean?

Sale Order is a document that we create internally in our system that is equivalent to Customer's Purchase Order.  If the customer wants to cancel his purchase order, for which already despatches have happened partially, there are two steps to be followed.
 
1.  You have to reverse the billings whatever you have done against the Sale Order.  That cannot be reversed just like that.  Since sale has already happened you have to take back your sale.  For that you have to do Credit Billing to Customer, which is nothing but your RE billing.  With this Customer's outstanding against the sale gets cleared.
 
2.  Second step is to short close the sale order for the pending quantity that has not been billed yet.  In this case you have to close the order by applying delivery block or by rejecting the order.  If your's is MTO scenario, it is better to reject the sale order so that MRP does not consider the sale order.  SAP has provision for both.
 
In any case you cannot and should not delete the sale order from the system.  Because in Sales it is important to have history of transactions for various measurements.  Ultimately, forecasting is done based on past transactions only.
 
If you are an SD Consultant and this is your client's requirement, it is your responsibility to explain and convince your client that sale orders should not deleted.
 
If you are an ABAP Developer, and the requirement is given to you from SD side, then you can suggest this to your SD Consultant.
 
Moreover, in what way your customer is concerned, whether you have sale order still lying in the system or not?  Customer's interest is only to cancel the sale outstanding thats all.  Try to find out the logical solution after analysing the requirement correctly.

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