Hello @Shyju Kanaprath ,
Thank you for reaching out to the Microsoft Q&A platform. Happy to answer your question.
There is no harm in using OS disk for the application however, it is recommended to use a separate disk for production application data as to avoid performance issues for both the machine and application. I would rather recommend using a smaller data disk for the application data.
Disk type comparison
Smaller Premium Managed Disks (32 GB and 64 GB) for cost efficiency
--please don't forget to upvote and Accept as answer if the reply is helpful--