The incident occurred in a village under Deori police station area of Giridih district on Tuesday afternoon, reports say.
Usman Ansari, the dairy owner, was badly injured in the attack in Giridih, around 300km from Ranchi.
The attack in the BJP-ruled state came close on the heels of the murder of a boy on a train in Haryana and amid continuing silence by the Prime Minister.
harkhand police appeared to have acted promptly this time. Unconfirmed sources put the number of bullets fired by the police at 80.
Tension ran high this afternoon when the carcass of the cow was found at Beria Haat. Some people suspected Usman, who runs a dairy in nearby Bhandara village.
A 100-strong group marched to the home of Usman, who is said to have served time in a murder case, and pounced on him. The police reached the spot in less than 30 minutes but the crowd had swelled to nearly 1,000.
"The police struggled for over two hours to rescue the man," said ADG (operations) R.K. Mallick. One Krishna Pandit was shot in the leg. It is not clear whether he was part of the crowd.
A police source said the cow belonged to the dairy owner and had died of illness. Before Usman could dispose of the carcass, the unidentified mischief-maker slit the cow's throat, the source added.
By the time the police reached the spot, the incident had ended and Usman Ansari and his family were rescued and taken to hospital.
Police had to open fire in the air to disperse the stone pelting crowd. Reports say some policemen were also injured.
Security had to be beefed up in the area after the incident.
(With inputs from The Telegraph,Calcutta)