Can I use SAX for Transforming XML Files to another XML as per the XSLT structure.
Yes, you can use SAX to produce a new XML file based on another XML file. However, that would have nothing to do with XSL per se (unless your SAX handler dynamically creates an XSL document, which you afterwards use to transform the same XML into something else).
How large files can be handled by SAX. My XML Files are around 50 MB.
The answer depends on what your SAX handler does. If your SAX handler keeps all the parsed information in memory until the whole document is parsed, the memory footprint will be relatively close to 50 megabytes, depending on the ratio of tags and actual content in your XML...