Pillay said the new incumbent should be subjected to a thorough security vetting and report to either the president and finance minister, to be clarified and endorsed by Parliament.
Pillay made a written submission and confirmed its contents when he appeared before Judge Robert Nugent’s commission into the lax tax administration and governance since 2014, including the tenure of Tom Moyane, who has been suspended.
Pillay was summoned to appear before the commission to answer to allegations of his alleged involvement in the so-called Sars rogue unit and an early retirement package he received in 2009, when he was a senior officer at Sars.
On Thursday, the commission allowed Pillay an opportunity to give his version of events, after he was suspended by Moyane in December 2014.
Prior to his testimony, the commission found that the allegation that Pillay received an undue “early retirement package” was unfounded.
The commission found that Moyane sought legal advice about the early retirement package and the law firm he contracted confirmed that it was legal, but Moyane and the Hawks continued to investigate then finance minister Pravin Gordhan and Pillay.
Pillay told the commission that the dispute between him and Moyane came after he appointed the Sikhakhane Commission to probe allegations against his senior Sars colleague, Johan van Loggerenberg.
Pillay said he gave the Sikhakhane Commission clear terms of reference, but said they "decided to change the terms of reference".
“The Sikhakhane Commission said they could not ignore the newspaper (articles) that forced them to include the so-called rogue unit in their terms of reference.
"He (advocate Muzi Sikhakhane) did not inform me they had changed the terms of reference,” Pillay said.
He added that he heard that the Sikhakhane Commission was also investigating the use of a R600million slush fund to set up the alleged unit.
On Thursday, Pillay said it took him two months to know the contents of the report, which prompted him and his team to critique Sikhakhane’s findings in a report which they handed to Moyane.
Pillay said the contents of Sikhakhane report worsened relations between him and Moyane, noting that Moyane organised a meeting between them at the Pretoria Central Prison but it deadlocked.
Then deputy president Cyril Ramaphosa presided over the second meeting between Pillay and Moyane, but it also could not arrive at a resolution, Pillay said.
On May 6, 2015, former finance minister Mcebisi Jonas brokered a deal between them in which Pillay agreed to resign from Sars. Pillay said the parties agreed to stop any further investigations but, two days later, Moyane laid criminal charges against him.
Earlier, Pillay explained that they set up the unit in the wake of increasing acts of illicit economy in 2011/12.
“We had made big inroads in arresting those dealing in illicit cigarettes. We also found that even the big players in the tobacco industry were cutting corners. It was for those reasons that we established the unit to clamp down on illicit economy,” Pillay said.
He said he gave all reports of the unit’s activities to Moyane, but was surprised when these reports appeared in a national Sunday newspaper in which the alleged existence of a rogue unit was made.
Pillay said the newspaper retracted the reports after they lodged a complaint with the press ombudsman.
Earlier, the head of the Sars investigative unit, Gene Ravele, made the same submission to Judge Nugent.