The bronze structure depicts the father of de facto civilian leader Aung San Suu Kyi -- Aung San -- on horseback and was unveiled early this month in the capital of Kayah state despite strong opposition.
Aung San is widely revered by the majority ethnic Bamar (Burmese) population as an independence hero for his role in the struggle against British colonial rule.
But the general, who was assassinated before independence in 1948, is viewed less favourably among many ethnic minority groups, who see him as a symbol of Bamar domination.
On Tuesday, several thousand people marched to the Kayah state parliament only to be blocked by police in riot gear who were lined up behind rolls of barbed wire.
"They attacked unarmed people," he said. "This should not happen under a democratic government."
Images showed medics cleaning up blood streaming from rubber bullet wounds of dazed-looking protesters, many dressed in local traditional red woven garments.
Statues of Aung San have been defaced in border states and the Suu Kyi-led government's plan to rename a bridge after him triggered mass protests in eastern Mon state in 2017.
Local police in Kayah state, located on the border with Thailand, could not be reached for comment.
The protest was symbolically held on Union Day, a public holiday meant to celebrate the nation's unity.
The statues of Aung San are a flashpoint in a larger debate over autonomy.
His daughter, Suu Kyi, swept to power in 2015 elections after nearly half a century of junta-rule, vowing to end decades of conflict between the military and ethnic armed groups fighting over resources, territory, and local control of government.
But peace talks have achieved little and resentment over the lack of progress has festered.
So far 82 protesters have been arrested in Kayah state since last July, when plans for the statue were first announced. Most of those have been detained in the last fortnight.
If convicted, they could face up to six months in jail while the protest leaders could be sentenced to up to two years with hard labour.
"No one should spend any time in court or behind bars for exercising their human rights," Smith said.
A further protest was due to take place in downtown Yangon on Tuesday afternoon.
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