The ornate oak overmantle, which has links to Royalty, was due to be sold by Whitchurch Auctions last Monday but was withdrawn at the last minute.
It has emerged that this was because an interim injunction order has been granted to Stafford Borough Council against Andrew Potter, who owns the overmantle, Whitchurch Auctions and auctioneer Michael Jones.
The council alleges it was removed from Seighford Hall, near Stafford, without listed building consent.
The council says it wants to prevent the sale of the overmantle and have the panel reinstated in the listed building.
The artefact had been estimated to bring between £1.9 million and £5m at auction.
Mr Potter, who lives in Stafford, denies any wrongdoing.
Michael Jones, from Whitchurch Auctions, says the case is set for a county court hearing in Birmingham on September 10, where it will be decided if it is taken further or is thrown out, where he intends to fight the injunction.
Mr Jones said: "It's a frivolous injunction. It's not tainted. The owner has a receipt for it to prove it is his."
Mr Potter said he had acquired the artefact from Seighford Hall two years ago, intending to make it into a headboard for a bed.
He said at that time it was infested with woodworm and was to be binned, but has since been told of its true worth and now it is attracting attention from prospective buyers around the world.
"I said it would make a fantastic headboard and I was given it along with a receipt," he said.
"I took it home and left it in my garage. Then there was the lockdown. I kept it in the garage and the weather was so hot it dried it out and all the woodworm was gone."
Mr Potter said he was later contacted by a museum expert who said it could be worth millions of pounds.
The stunning carving, which depicts Queen Elizabeth I coat of arms, is almost 9ft by 5ft.
It was discovered that the overmantle had been gifted to paymaster general Richard Eld by Queen Elizabeth I for services rendered to the crown.
Seighford Hall, which is now being transformed into a luxury hotel, is also said to have been given to Richard by the Queen as a reward for his services as paymaster to the Royal forces in Ulster.
The authority is bringing the case under the Dealing in Cultural Objects (Offences) Act 2003.
The legislation refers to the acquisition of cultural property and makes it an offence to acquire, dispose of, import or export ‘tainted’ cultural objects, or agree or arrange to do so; and for connected purposes.