The Home department would make a request to the Patna High Court to provide name of either a serving judge or retired judge to head the probe team, Principal Secretary Home Amir Subhani said in a release.
The government also decided to give marching orders to Bagha Police Superintendent Sunil Kumar for the firing incident, he said.
The inquiry team comprised Additional Director General of Police (Law and Order) S K Bhardwaj and Director General (Prisons) Anand Kishore.
Naurangia police station officer in-charge Vinay Kumar has already been suspended. OC of Balmikinagar was also found not fulfilling duty, Subhani said, adding disciplinary action would be initiated against the two.
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The government also decided to provide Rs 5 lakh compensation to family of the dead. It also decided to provide proper medical treatment to injured from state's fund.
Former NDA partner BJP observed "Bagha bandh" on June 26. Former Deputy Chief Minister Sushil Kumar Modi met victims families there. Modi and other BJP leaders today observed a dharna in the capital on Bagha police firing.
Left parties had also observed Bihar bandh yesterday on the incident.