Service to service authentication in Azure without ADAL - azure

Question

I configured azure application proxy for our on-premise hosted web service and turned on Azure AD authentication. I am able to authenticate using ADAL but must find a way to get the token and call web service without ADAL now (we are going to use this from Dynamics 365 online and in sandbox mode I can't use ADAL). I followed some examples regarding service to service scenario and I successfully retrieve the token using client credentials grant flow. But when I try to call the app proxy with Authorization header and access token, I receive an error "This corporate app can't be accessed right now. Please try again later". Status code is 500 Internal server error.
Please note the following:
I don't see any error in app proxy connectors event log.
I added tracing on our on-premise server and it seems like the call never comes there.
If I generate token with ADAL for a NATIVE app (can't have client_secret so I can't use client credentials grant flow), I can call the service.
I created an appRole in manifest for service being called and added application permission to the client app.
This is the way I get the token:
public async static System.Threading.Tasks.Task<AzureAccessToken> CreateOAuthAuthorizationToken(string clientId, string clientSecret, string resourceId, string tenantId)
{
AzureAccessToken token = null;
string oauthUrl = string.Format("https://login.microsoftonline.com/{0}/oauth2/token", tenantId);
string reqBody = string.Format("grant_type=client_credentials&client_id={0}&client_secret={1}&resource={2}", Uri.EscapeDataString(clientId), Uri.EscapeDataString(clientSecret), Uri.EscapeDataString(resourceId));
HttpClient client = new HttpClient();
HttpContent content = new StringContent(reqBody);
content.Headers.ContentType = new System.Net.Http.Headers.MediaTypeHeaderValue("application/x-www-form-urlencoded");
using (HttpResponseMessage response = await client.PostAsync(oauthUrl, content))
{
if (response.IsSuccessStatusCode)
{
DataContractJsonSerializer serializer = new DataContractJsonSerializer(typeof(AzureAccessToken));
Stream json = await response.Content.ReadAsStreamAsync();
token = (AzureAccessToken)serializer.ReadObject(json);
}
}
return token;
}
AzureAccessToken is my simple class marked for serialization.
I assume it must be something I haven't configured properly. Am I missing some permissions that are required for this scenario?
Any help is appriciated.