His family paid £2,500 for three plots at a multi-faith cemetery and had his grave facing towards his home - a Romany tradition.
But they were left shocked when a Muslim family who owned a plot next to Mr Smith's grave complained to cemetery bosses about their loved-ones being buried next to a "non-believer".
Just two weeks after his funeral, which was one of the largest ever held at the cemetery, the family have been warned Mr Smith's grave may have to be moved.
The local council, who run the award-winning cemetery, will meet on Wednesday to decide whether Mr Smith's grave will be exhumed and moved to another area of the cemetery.
His distraught family, which includes eight children, 25 grandchildren and 40 great grandchildren, have vowed to fight "tooth and nail" to stop any exhumation taking place.
His daughter-in-law, Tracey Smith, 46, said: "This whole thing has devastated our family.
Four days before the funeral, Burbage Parish Council received a complaint from the Muslim family who own the neighbouring plot.
Julie Perrin, principal officer of the council, wrote to Mr Smith's family and asked if they would consider moving Mr Smith to an alternative plot but they refused.
Mrs Smith, from Aston Firs, Leicestershire, added: "On January 26 Julie Perrin said we should find another site but she didn't even apologise to us.
"The next day our undertaker phoned saying the she had been on the phone to them to see if they could use one of our plots to plant a hedge as a kind of barrier.
"But the bodies will still be together six feet underground so what is the point?
"I just feel they should have stuck to the rules (being a multi-faith cemetery) from the beginning, instead of deeply upsetting us just to please the Muslim community.
"The council received our payment through the undertakers, but they haven't put our cheque through yet for some reason.
"There is no way Shady will be exhumed, if they suggest it we will take them to the highest court in the land. We will fight tooth and nail to stop the grave being dug up."
On the Burbage Parish Council website, a document titled "Burbage Cemetery: Regulations and Management Rules" makes no mention of segregation or separate areas based on religion.
Another council leaflet regarding the cemetery states: "So that people of all denominations can use Burbage Cemetery, the graveyard ground at Lychgate Lane is unconsecrated."
Chairman of the parish council, Councillor Richard Flemming, said: "Burbage Parish Council provides an award-winning cemetery for the benefit of the whole community.
"Unfortunately the parish council has recently received representation from two families regarding the allocation of adjacent grave plots within Burbage Cemetery.
"The parish council is sympathetic to the feelings of both families concerned and is committed to working with the relatives and the wider community to reach an amicable and acceptable solution."
The council said on Tuesday that the family of the Muslim man may have mistakenly believed his grave was in an Islam-only section of the cemetery.
Principal Officer Julie Perrin, said: "There was a huge level of complaint so the correct procedure has been followed.
"There appears to be an assumption or misunderstanding on the part of the family complaining because there is nothing in our policy documents about there being any segregation.
"Any application for moving a body would have to go through the Home Office if a family wanted that doing.
"There will be a meeting regarding the policy (of segregating graves depending on faith) where I hope the majority of the 20 councillors will attend but the families will not be represented there."
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