Today I tried scanning the non Paytm QR code (don't know which QR code it was as it was generated on PoS machine) via Paytm app.
It did not give an option of making payments via wallet, instead asked for UPI reactivation (I have deactivated UPI on paytm)
So I guess this system of PPI via UPI is not in effect as yet.
Paytm wallet balance works only on Paytm QR codes