Total Supply is the total amount of tokens in existence right now. In Stellar, when an asset is sent back to the issuing account those tokens cease to exist on the ledger. This means that while total supply will never increase, it may decrease as a result of transactions sent to the issuing account.
Example: Someone sends 10 SHx to the SHx issuing account. These 10 SHx will cease to exist and the total supply will decrease by 10.