Combine the garlic and ginger in a food processor. Blend into a paste and set aside.
Heat the oil in a large skillet over medium heat. Add the cinnamon stick, cumin seeds, anise pod, and lime leaves. Add the shallots; cook and stir until starting to brown, about 5 minutes. Stir in the ginger garlic paste. Cook and stir for a few more minutes, and then stir in the mutton and tomatoes. Cover and simmer over low heat for 30 minutes.
Stir in the curry powder, coconut milk and water and add the potato. Season with salt to taste. Cover and simmer until potato and mutton are tender, about 30 more minutes.