Yes - that's supported.
As per https://learn.microsoft.com/en-us/azure/vpn-gateway/vpn-gateway-vpn-faq
Can I use Azure VPN gateway to transit traffic between my on-premises sites or to another virtual network?
Resource Manager deployment model Yes. See the BGP section for more information.
Classic deployment model Transit traffic via Azure VPN gateway is possible using the classic deployment model, but relies on statically defined address spaces in the network configuration file. BGP isn't yet supported with Azure Virtual Networks and VPN gateways using the classic deployment model. Without BGP, manually defining transit address spaces is very error prone, and not recommended.
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hth
Marcin