The incident took place when two saw machine unit owners in the area indulged in a quarrel following which one of them identified as Badrilal Lovanshi (32) was shot dead by the other belonging to a minority community, the official said.
Later, an enraged mob set afire the house, tractor, motorcycle and saw machine of the accused triggering tension in the area following which police opened fire in the air to quell the violence.
Additional force has been deployed in the town to keep a vigil, he said, adding that the situation is tense but under control.
No arrests have been made so far.