The bench of justices Obaidul Hassan and Krishna Debnath order came on Tuesday after a judicial probe found some policemen were involved in the incident on Nov 6 last year.
The home secretary has been told to implement the order to remove SP Md Ashraful Islam.
The court has also instructed withdrawal of all police personnel on duty there that day, an order which the home secretary, IGP and Rangpur Range police DIG will have to implement.
They will also have to update the court over the withdrawal of the police personnel within four weeks.
On Dec 14 last year, the same High Court bench ordered the judicial inquiry after a video of police setting fire to Santal houses gone viral on the social media.
The probe team led by Gaibandha Chief Judicial Magistrate Shahidullah visited the spot at Gobindaganj Upazila on Dec 27 and recorded witnesses' testimonies.
The report said two policemen and one from the Detective Branch had set fire to the houses while several other policemen watched it, but did not try to put out the flames.
Those who were setting fire could not be identified as they were wearing helmets and the video was shot from a distance.
The probe body sought names of police personnel on duty that day from the Gaibandha SP, but he could not provide it.
In 1962, the Rangpur Sugar Mill authority acquired 1840.30 acres of land from Santals and Bengalis in 18 villages for sugarcane farming in Gaibandha's Gobindaganj Upazila.
Santals claim the sugar mill has used the land to grow rice and tobacco, in violation of the agreement, and they have occupied the land and launched protests.
Last year, Santals built several hundred houses on the disputed land and began living there.
Clashes broke out on Nov 6 after the sugar mill authorities attempted to reclaim the land. Santal homes were looted during the clashes.
Police opened fire at one point during the clashes. Three Santal residents were killed in the firing and many others were wounded.
The shooting sparked a raging debate in Bangladesh. Protests broke out in many areas, including the capital, Dhaka.
According to the government, the land does not belong to the Santals.
It says ‘land sharks’ are using the Santals to get hold of the land so that they can later acquire it for themselves.
Santal residents, on the other hand, say they want the ‘land of their forefathers’ returned to them.
The local police started a case against more than 300 Santals over the incident. Four members of the ethnic community had been arrested in the case and later released on bail.
On Nov 16, a Santal victim Swapan Marma filed a case against 600 unidentified men for attack, loot and arson. Police have so far arrested 21 persons in the case.
Ten days later, another Santal man, Thomas Hembhrom, filed a complaint with the police over the same incident. Police had lodged it as a general diary as a previous case had been filed.
A month into the incident, a video shot during the Nov 6 eviction emerged on the social media creating a firestorm.
Policemen were seen firing on a Santal village in the footage, which had gone viral. Some policemen were seen kicking against a house and one of them is setting fire to it.
Another person in plain clothes was seen helping police spread the fire to other houses.
In another part of the video, several policemen wearing helmets were seen setting fire to a house.
One of them wore a dress with 'DB' (Detective Branch) printed on it. Another law-enforcer wore a dress with 'police' printed on it.
The High Court ordered the judicial inquiry after the petitioners filed supplementary pleas.