Adjusted total turnover- GST

I filed refund application for one of my client. Client is the exporter. He exported the goods without payment of duty.

We calculated ;'Adjusted total turnover' without considering the domestic exempt supply. Department issued SCN, saying exempt supply should be part of ATT. Notification 39/2018 amended the definition of adjusted total turn over. That has led to this issue. 

As per dept interpretation, exempt supply excluded from the zero rated supply only.

Please shed some light on this definition. (39/2018 notification ATT definition, enclosed for your perusal.)