Does Infernal Legacy Use Spell Slots?

Infernal Legacy gives a tiefling the ability to cast hellish rebuke once between long rests. It doesn't require a spell slot.

Can a Tiefling cast hellish rebuke with spell slots?

Infernal Legacy grants tieflings ability to cast Hellish Rebuke as a reaction at 3rd level, as if it was cast using a 2nd level spell slot. Hellish Rebuke as spell has Verbal and Somatic components.

Do racial spells use a spell slot?

They do not and cannot use a spell slot, they have their own number of usages (or unlimited uses). They are always cast at their lowest level, since they can't use a higher slot.