Can i connect 14-2 wire to the current 12-2 wire in this case?
That is fine.  Whichever circuit breaker feeds that entire circuit, must be replaced with a 15A breaker.  The presence of any 14AWG wire anywhere in the circuit requires the breaker be 15A.  

I don't know what you had in mind with the switch, but switches are not circuit breakers. 

If you plan to use a full 15A in the shed, a common $1 switch will not handle that, you'd need to upgrade to a $7ish heavy duty switch.