That may be the case for some gas stations but it is hardly the case for the vast majority of them. The majority of them are run by law abiding citizens who want to follow the law. They want no legal trouble.

I am Indian too, with a father that owned and ran a gas station. (My dad's shop was among the top gas-volume stations in America during his time, I forget exactly how much, but he had a few trophies from the company for it).

They preferred cash during his time because the 2-3% charge was a significant dent in margins. When credit cards started becoming popular, dealers still did not want to take it. So the company encouraged dealers to accept it by promising to refund the charges for a time.

I don't dispute that cheating like what you described happens. I dispute the implication that cheating the IRS is why most businesses prefer cash instead of credit.