Can I setup & use a google play account for free & paid items only using gift cards?
Why should it not be possible?


You can setup a Google account without any payment method attached.
You can add giftcard codes to your playstore account.
Giftcards can be used to pay for apps.


Watson combined: Setting up an account with no payment, add a giftcard to it – and with that should be able to pay for apps (and use them, of course).