Different authentication behaviour when starting postgres from pg_ctl and when starting from systemd

I am running postgres 9.6 cluster on ubuntu 20. All installation and starting the database is fine, however, I am experiencing a weird behavior. In the pg_hba.conf file, I am trusting any connection from any user from the local host and it is working just fine when I start the cluster using the "pg_ctl start" utility. However, when I start it from the systemd, systemctl start postgresql@9.6-main, it fails with the following error Anyone has proper explanation for this difference in behaviour ?