Source: As worded by Indian Railways, Government of India

Once your itinerary is finalized, you can approach the Divisional Commercial Managers of the Division or Station Managers of certain major stations to which the journey commencing station belongs.

The Divisional Commercial Manager or the station authorities will then calculate the cost of the tickets based on your itinerary. He will also inform the Station Manager concerned of the same, in the prescribed format. You can purchase Circular Journey Tickets by presenting this form at the Booking Office of the station from where you propose to start your journey. After purchasing the Circular Journey Ticket, you must approach the Reservation Office to reserve your accommodation for various laps of your journey. You will then be issued reserved tickets for the journey.