Can potassium nitrate react with sulphuric acid?

Definitely there will be reaction among the concentrated sulphuric acid and potassium nitrate:

KNO3 + H2SO4 -> HNO3 + KHSO4

You will see brown fumes of Nitric Acid vapour (with nitrogen dioxide NO2) comes out of the reacting agents and potassium hydrogen sulphate remains.

For diluted sulphuric acid is used instead of concentrated, there will be no reaction.