Exponent operation over element of G
Assuming that $M_T$ is the order of $g$, then it's real easy to compute $(D)^{\%M_T}$: it's the value $D$.

That is, if $M_T$ is the order of $g$, then we have the identity $g^x = g^{x \bmod M_T}$ for any $x$, and in particular, $g^{r + M_S} = g^{(r + M_S) \bmod M_T}$.

The paper is just noting that the $\bmod$ operation happens implicitly here.

BTW: I've never seen the notation $(g^a)^{\%b}$ before; I don't believe that's very standard...