If your agreement for sale contained a clause that there is water source in the plot, then you eligible to raise dispute over the same. Otherwise, not. Stamp duty varies from state to state and you better check the stamp duty applicable to Agreement for Sale in your state. In Karnataka it is Rs. 200/-. It should have been registered. However, non-registration of the document does not make it invalid.
As you are liable to observe the covenants of the agreements, you cannot say that the vendor should return the advance amount paid because there is no water source in the plot. Better, negotiate and convince him for refund of the advance amount. Failing, you need to find violation of clauses, if any, by the vendor to sue him. In such an even only, you may issue legal notice.