Play in-app update not working for apps with Play App Signing Enabled

I have been trying for quiet some time to figure out why my in-app updates won't work. I basically tried all I could and search the internet with no avail. Then today I decided to test the code with internal app sharing. The code works fine and update dialog is shown and app updates just fine.

So I thought it must have something to do with signing and deployment. Checking again I find I enabled Play App Signing (see photo below). I'm suspecting that might be a cause though can't prove it.

Have anyone with such setting been able to use play in-app update? Is there special setting to allow it work like if I was using my keys 100%?

It seems like Google Playstore and in-app updates are not in sync. I had to wait for almost a day after update was available on playstore for dialog to show up. It seems like Update is available when Playstore sends notification that there are updates.

Incoherent behavior IMHO that Google have to iron straight!