Recently we came across a case from a customer where they were trying to import some custom Gallery Items and were getting the following output:-

VERBOSE: Performing the operation “Add Gallery item” on target “https://blob.xxxxxx.xxxxxx.xxxxxx/azpkg/xxxxxxxx.azpkg”.
VERBOSE: Performing operation add on $GalleryAdminClient.
VERBOSE: Operation failed.
Get-Exception : Code = InternalServerError
Message = Encountered internal server error. Please try again.
At C:\Program Files\WindowsPowerShell\Modules\Azs.Gallery.Admin\0.2.2\Get-TaskResult.ps1:99 char:21
+ Get-Exception -Exception $ex
+ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~
+ CategoryInfo : NotSpecified: (:) [Write-Error], Exception
+ FullyQualifiedErrorId : System.Exception,Get-Exception

This issue was caused because the container public access level was no public read access for containers and blobs.

Hope this helps!