VAT ne Vaat lagaa di

Dear All,

Am on the verge of taking possession of my home. Now the builder has asked me for paying up of VAT and society chgs etc etc which I need to organise funds for. I have some unused amount of my loan which I am planning to avail of to get these funds organised and pay the builder. He is somehow behaving in a funny manner. He is only sending a letter for part of the VAT amount (5%) and the remaining part he is not giving any document in writing. He says this is an agreement between buyer and him that they will deposit the amount in an escrow account and depending on the decision taken by the court (whether tp charge VAT or not and if yes shd it be 1% or 5%) and accordingly the amount will be given back to buyers. I have the following questions

1. Should I as a buyer be paying VAT at all. I read on some expert forums that buyers should not pay VAT
2. I have no idea why he is depositing it in an escrow account
3. If what he is doing is legal and as per process why is he not giving me the amount in a letter. This will help me show my requirement of funds with my home finance company.

I will truly appreciate answers and suggestions to these questions...Thx