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5. If the Collector would have acted in accordance with the provisions of the Stamp Act, then the following scenarios may have arisen:

 Once the Collector would have provided his opinion, it would be upto the Applicant to take necessary further steps viz., make payment of NEUTRAL CITATION C/SR/1/2023 CAV JUDGMENT DATED: 20/12/2023 undefined stamp duty and seek certification under Section 32 of the Stamp Act, or make an application to the Collector under Section 40 of the Stamp Act, or not stamp the said instrument at its own risk.

1. It is reiterated that had the Collector followed the procedure of Section 31 of the Stamp Act, then the complexities that have arisen in the present facts would have been avoided. The Collector did not decide the Applicant's application under Section 31 of the Stamp Act and did not provide his opinion. If the Collector would have provided his opinion under Section 31 of the Stamp Act, instead of illegally impounding the said instrument under Section 33 of the Stamp Act and illegally initiating proceedings under Section 39 of the Stamp Act, it would have been open to the Applicant to apply to the Collector under Section 40 of the Stamp Act and pray for stamping of the instrument in accordance with the said provision.

13.1 In the case of Trustees of H.C. Dhandha Trust (supra), the Apex Court has observed as under:

"12. Only question to be determined in these appeals is as to whether the imposition of ten times penalty by the Collector of Stamps under Section 40 of the Indian Stamp Act, 1899 was validly imposed or not.
15. Section 40 of Indian Stamp Act, 1899 provides for Collectors power to stamp instruments impounded. Section 40(1) which is relevant for the present case which is as follows:

23. We may refer to judgment of this Court in Peteti Subba Rao vs. Anumala S. Narendra, 2002 (10) SCC 427. This Court had occasion to consider in the above case provisions of Section 40 of the Indian Stamp Act, 1899. Referring to Section 40 this Court made following observation in paragraph 6:

"6.........The Collector has the power to require the person concerned to pay the proper duty together with a penalty amount which the Collector has to fix in consideration of all aspects involved. The restriction imposed on the Collector in imposing the penalty amount is that under no circumstances the penalty amount shall go beyond ten times the duty or the deficient NEUTRAL CITATION C/SR/1/2023 CAV JUDGMENT DATED: 20/12/2023 undefined portion thereof. That is the farthest limit which meant only in very extreme situations the penalty need be imposed up to that limit. It is unnecessary for us to say that the Collector is not required by law to impose the maximum rate of penalty as a matter of course whenever an impounded document is sent to him. He has to take into account various aspects including the financial position of the person concerned."