It could be the case where another plugin or the theme itself manages the visibility of the category taxonomy for the regular Posts type.

Have you tried basic troubleshooting steps including plugins and themes troubleshooting?

I just found out that the Toolset Types plugin is causing such an issue

I have to figure it out how to configure it as for now it does not recognise the post categories, it just shows all the posts on the page without category filter.

We’re not able to provide support for commercial plugins in these forums. No one knows a plugin as well as its own developers — they’re the ones to ask ??