Hi @varunreddy
The error is likely due to a capacity issue with creating the server in that region. If the region is not constrained, then you can try creating a server in other region.
Else you need to open a support case to grant the capacity to your subscription.
Please refer below document https://learn.microsoft.com/en-us/azure/azure-sql/database/quota-increase-request?view=azuresql
Let us know if you have any question.
Thank You!