Dotnet restore MyProj.csproj thows "The file type is not recognised" on VSTS

I'm making my build pipeline for dotnet Core project. Part of my build script executes dotnet restore. I do it this way:

dotnet restore C:/Projects/MyProj/src/MyProj/MyProj.csproj

And it restores locally without a problem. When I push the same script to VSTS build server, in logs I see execution like this:

dotnet restore D:/a/1/s/src/MyProj/MyProj.csproj

but then I get error:

error: Invalid input 'D:/a/1/s/src/MyProj/MyProj.csproj'. The file type was not recognized.

What am I doing wrong? why does it work locally and not on VSTS.

I'm using the same version of dotnet.exe locally as on VSTS:

Version : 1.1.0
Build : 928f77c4bc3f49d892459992fb6e1d5542cb5e86

I've got a global.json file sitting outside of src folder:

{
  "projects": ["src"],
  "sdk": {
    "version": "1.1.0"
  },
  "packages": "packages"
}

Folder structure as following:

   Root/
       build.cake
       build.ps1
       global.json
       src/
          MyProj.sln
          MyProj/
            MyProj.csproj
            *.cs
          MyProj.Tests/
            MyProj.Tests.csproj
            *.cs

Solution is created in VS2017, so this is latest csproj file format.

What else should I check?