[Name, Company Name & Address here]
We are sorry to inform you that we are unable to process your order for invoice [invoice no.].
We cannot supply you the [product/service name] because [state reason here in brief].
[Suggest a substitute]. Please inform us if it works for your requirements.
We will be really happy to serve you next time when you place an order.
Look forward for a fruitful business relationship.
Encl: [Enclosures List here]