In place upgrades are not supported as of now.
Microsoft does not support an upgrade of the operating system of a Microsoft Azure virtual machine. Instead, you should create a new Azure virtual machine that is running the supported version of the operating system that is required and then migrate the workload.
Reference docs:
- https://support.microsoft.com/en-us/help/2721672/microsoft-server-software-support-for-microsoft-azure-virtual-machines
- https://zcusa.951200.xyz/en-us/windows/wsl/release-notes
You can post this as a product feedback here. This will allow the community to up-vote and for the product team to include into their plans.