Please disregard. I figured it out. For anyone having a same issue the solution is below:

For example I am invoking sqcmd as below

sqlcmd -S myServer\instanceName -i "\\myserver\my path\myScript.sql"

In...

Background: I have .sql script file of a sql job that incudes a powershell task step. This powershell job step uses sql agent tokens like this -

$sqlInstance = "(ESCAPE_DQUOTE(SRVR))"...