From Chapter 1:
"Tarlton, as other gentlemen used, at the first comming up of tobacco, did take it more for fashion's sake than otherwise, and being in a roome, set between two men overcome with wine, and they never seeing the like, wondered at it, and seeing the vapour come out of Tarlton's nose, cryed out, fire, fire, and threw a cup of wine in Tarlton's face. Make no more stirre, quoth Tarlton, the fire is quenched: if the sheriffes come, it will turne to a fine, as the custome is. And drinking that againe, fie, sayes the other, what a stinke it makes; I am almost poysoned. If it offend, saies Tarlton, let every one take a little of the smell, and so the savour will quickly goe: but tobacco whiffes made them leave him to pay all."

From Chapter 7:
It seems to have been taken for granted that country parsons smoked. smoking was universal among their male parishioners from the squire to the labourer (when he could afford it), so that it was only natural that the parson, with little to do, and in those days not too much inclination to do it, should be as fond of his pipe as the rest of the world around him. In a World of 1756 there is an account of a country gentleman entertaining one evening the vicar of the parish, and the host as a matter of course proceeds to order a bottle of wine with pipes and tobacco to be placed on the table. The vicar forthwith "filled his pipe, and drank very cordially to my friend," his host. One cannot doubt that Laurence Sterne, that most remarkable of country parsons, smoked. His "My Uncle Toby" is among the immortals, and Toby without his pipe is unimaginable.