To recreate:

Go to Jira > Manage apps.  UPM shows update available but the version listed as newer is 3.0.3 whereas installed version is 4.0.1.  Attempting to update results in error message: "Cannot install a lower version than the currently installed version."

Atlassian Marketplace also shows the lower version at the top of the version list. 

NOTE: This issue is starting to trend as L1 tickets in GSAC. 

Workaround

Currently there is no known workaround for this behavior. A workaround will be added here when available