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Manual customer creation error out but not erroring with Back-end API.

I am trying to update same Vat number for two different customers from front end and system is throwing error:
This tax registration number is already in use for Party type: ORGANIZATION and party name: XXXX XXXX XXXX OIL Company.
While if I try to perform same action from back end, there is no error API is giving and two customers are getting created and updated with same vat number.

Can anyone help with behaviour of API from back end and functionality of customer page from front end.

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