Hello,
it is possible that there is a suitable billing type for cancellation already, don't rush to create a new one.
shall we use same cancelled billing type number series to new billing type
I am not sure if you meant number ranges for the billing or ODN numbering.
In both cases - depends on your current setup and/or localization packages.
SCN members have no access to your environment - this is why I suggested to ask a senior colleague for help.
It could be that you have numbers assigned to billing from user exit, this could be a vanilla setup (I doubt that), there could be reports affected, localization specifics etc.
Please don't start customizing (including number range assignment) before you discuss the topic with your colleagues, ideally with your solution architect.
Also - who should be able to use cancellation of the cancellation document? How will you restrict its use, do you need configuration steps from other teams.