You can change your server version from the Dashboard. You don't have to activate your server to make this change!
Next to the Activate Server button, you will see your version, if you click this you will be able to select a different version. From the drop-downs, you can select your Server Type and Server Version.
Once you hit Save Changes your server version will be updated. Please be aware that you are not able to downgrade your version due to the way the files are generated. For example, if you change your server from Paper 1.20.4 to Paper 1.21.1 you will not be able to go back to 1.20.4 unless you have a manual backup.
We always recommend creating a manual backup when making any major changes to your server in case you need to undo those changes. You can find out more about how to set up a backup here.