That error usually means you are trying to read from some path (examples: /dbfs, /tmp, /cloud storage) which is not a registered UC Location. [or you have some 3rd party library/connecter (one that's not supported in Lakehouse Fed or Lakeflow Connect etc)]

The reason for this error is that Serverless uses the same permission model as a Unity Catalog Standard (p.k.a Shared) access mode and enforces both UC ACLs and legacy Table ACL's. In this mode any "unknown" path referred directly or indirectly (a connector could write temp files to /tmp for example) falls into the legacy Table ACL world. And the only privilege in that old model was this ANY FILE grant. (contrast it with READ FILES, WRITE FILES on each External Location in UC). The ANY FILE is an all or nothing GRANT on all non-UC paths. (ie not per path)

You should get this same error if you run this on a non-Serverless UC Standard Access Mode cluster.

If you have no way to work around this, you can do the following:

GRANT SELECT ON ANY FILE TO `principal`

to the identity running the job and it will work.

(Workspace admins get this ANY FILE by default which is why you don't need to explicitly grant it.

In general, the best practice is to try and only use UC registered Locations/Volumes and then you are unlikely to need this specific permission.