Aaqib Ahmad Bhat, who was in his twenties, was found dead near his water tanker at Balpora in Shopian district, 52 km from here, leading to protests this morning, they said.
Two youths who were accompanying Bhat claimed that he was taken into custody by CRPF personnel from a nearby camp at Balpora last night, they said.
The duo has been detained for questioning.
As hundreds of protesters gathered in Shopian town, senior police and civil administration officials of the district rushed to the spot to pacify the crowd, the sources said.
They said the body of the deceased has been sent for postmortem after inquest proceedings were started.