When it happens to be http traffic it works. if you look at the line directive lines,

proxy_pass http://$http_host$uri$is_args$args; // Doesnt work
proxy_pass http://$http_host$uri$is_args$args; // Works

server {
listen 8080;

location / {
resolver 8.8.8.8;
proxy_pass http://$http_host$uri$is_args$args; // Doesn't work
proxy_pass http://$http_host$uri$is_args$args; // Works
}

error_page 500 502 503 504 /50x.html;
location = /50x.html {
root html;
}
}