LicenseType parameter when you scale your Azure SQL Managed Instance

Determines which License Type to use. Possible values are:

• BasePrice - Azure Hybrid Benefit (AHB) discounted pricing for existing SQL Server license owners is applied. Managed Instance service price will be discounted for existing SQL Server license owners.
• LicenseIncluded - Azure Hybrid Benefit (AHB) discount pricing for existing SQL Server license owners is not applied. Managed Instance service price will include a new SQL Server license costs.

You will face this issue when you have "BasePrice"/"Azure Hybrid Benefit" (AHB) value in your Azure SQL Managed Instance and try to scale through Power Shell:

Connect-AzAccount

Set-AzSqlinstance -Name mi-test-one -ResourceGroupName rgtest -Vcore 8 -Force

Set-AzSqlinstance : Long running operation failed with status 'Failed'. Additional Info:'Configured pricing tier and vCore values require greater number of licenses than previous instance configuration. Please submit operation again with specified value
for licenseType property.'
At line:2 char:1
+ Set-AzSqlinstance -Name mi-test-one -ResourceGroupName rgtest -Vcore ...
+ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
+ CategoryInfo : CloseError: (:) [Set-AzSqlInstance], CloudException
+ FullyQualifiedErrorId : Microsoft.Azure.Commands.Sql.ManagedInstance.Cmdlet.SetAzureSqlManagedInstance

In this case, you need to add the parameter -LicenseType

Set-AzSqlinstance -Name mi-test-one -ResourceGroupName rgtest -Vcore 8 -LicenseType BasePrice -Force

You won't face this issue through the Azure Portal because the LicenseType parameter is always set.