Bhat was hanged in New Delhi's Tihar jail this day in 1984 and was buried in the jail premises.
Shops and businesses were shut in the summer capital Srinagar, where groups of stone pelting protestors shouting pro-independence slogans clashed with police and paramilitary Central Reserve Police Force in the Maisuma locality.
The police fired tear gas and resorted to baton charges to disperse the protestors.
Tension gripped the locality which is a strong hold of the JKLF chairman Mohammad Yasin Malik, on Tuesday, after several shopkeepers were roughed up by the paramilitary CRPF following an altercation.
Authorities have ordered an inquiry into the incident and decided to deploy the local police in the area.
Public transport is off the roads in capital city and other towns. However, skeletal private transport was plying on the city roads.
A report from north Kashmir's Baramulla town said that groups of youth indulged in stone pelting on the police, who responded by firing tear-smoke and baton charges.
Activists of the moderate All Parties Hurriyat Conference headed by Mirwaiz Moulvi Umar Farooq staged a protest in Srinagar and demanded the return of mortal remains of Bhat to be buried in the city.