"And you shall sacrifice upon it" (Exodus 20:21): "upon it" means beside it. Or perhaps "upon it" is meant literally? And logic would suggest so: if the north side of the altar, which is not fit for atonement, is fit for slaughter, then the top of the altar, which is fit for atonement, surely it is right that it be made fit for slaughter. But the inner altar shall prove otherwise, for it is fit for atonement and yet is not fit for slaughter; let it prove regarding the outer altar that, even though it is fit for atonement, it should not be fit for slaughter. No: if you have said this of the inner altar, which does not permit and does not render fit and does not complete the atonement, and therefore is not fit for slaughter, would you say the same of the outer altar, which permits and renders fit and completes the atonement, and therefore should be fit for slaughter? Therefore Scripture teaches, "And you shall offer your burnt offerings, the flesh and the blood" and so on (Deuteronomy 12:27): the flesh and the blood upon the top of the altar, but there is no slaughter upon the top of the altar. Rabbi Yose says: even to slaughter upon the top of the altar, and Scripture supports him, as it is said, "An altar of earth you shall make for Me" and so on (Exodus 20:21). One verse says "your burnt offerings and your peace offerings," and another verse says, "And you shall offer your burnt offerings, the flesh and the blood" (Deuteronomy 12:27). How can these two verses be reconciled? Rabbi Yose bar Rabbi Judah said: from the middle of the altar and to the north is as the north, from the middle of the altar and to the south is as the south. And I have only the north of the altar, which is fit for slaughter; from where do I learn the rest of the north of the courtyard? Scripture teaches, "And he shall slaughter the lamb in the place" and so on (Leviticus 14:13), for there is no need for Scripture to say "in the holy place," except to render fit for it the entire northern side.
Where Beside the Altar an Offering May Be Slaughtered
Yalkut Shimoni on Torah 304:2
וְזָבַחְתָּ עָלָיו, עָלָיו, כְּנֶגְדּוֹ. אוֹ עָלָיו כְּמַשְׁמָעוֹ, וְהַדִּין נוֹתֵן, וּמָה אִם צְפוֹן הַמִּזְבֵּחַ שֶׁאֵינוֹ כָּשֵׁר לְכַפָּרָה כָּשֵׁר לִשְׁחִיטָה, רֹאשׁ הַמִּזְבֵּחַ שֶׁהוּא כָּשֵׁר לְכַפָּרָה, דִּין הוּא שֶׁיֻּכְשַׁר לִשְׁחִיטָה. וַהֲרֵי מִזְבֵּחַ הַפְּנִימִי יוֹכִיחַ, שֶׁהוּא כָּשֵׁר לְכַפָּרָה, וְאֵינוֹ כָּשֵׁר לִשְׁחִיטָה, הוּא יוֹכִיחַ עַל מִזְבֵּחַ הַחִיצוֹן אַף עַל פִּי שֶׁהוּכְשַׁר לְכַפָּרָה, לֹא יֻכְשַׁר לִשְׁחִיטָה. לֹא אִם אָמַרְתָּ בַּמִּזְבֵּחַ הַפְּנִימִי שֶׁהוּא לֹא מַתִּיר וְלֹא מַכְשִׁיר וְאֵינוֹ גּוֹמֵר אֶת הַכַּפָּרָה לְפִיכָךְ אֵינוֹ כָּשֵׁר לִשְׁחִיטָה, תֹּאמַר בַּמִּזְבֵּחַ הַחִיצוֹן שֶׁהוּא מַתִּיר וּמַכְשִׁיר וְגוֹמֵר אֶת הַכַּפָּרָה, לְפִיכָךְ יֻכְשַׁר לִשְׁחִיטָה, תַּלְמוּד לוֹמַר "וְעָשִׂיתָ עֹלֹתֶיךָ הַבָּשָׂר וְהַדָּם" וְגוֹ', הַבָּשָׂר וְהַדָּם בְּרֹאשׁ הַמִּזְבֵּחַ, וְאֵין שְׁחִיטָה בְּרֹאשׁ הַמִּזְבֵּחַ. רַבִּי יוֹסֵי אוֹמֵר, אַף לִשְׁחֹט בְּרֹאשׁ הַמִּזְבֵּחַ, וְהַכָּתוּב מְסַיֵּעַ, שֶׁנֶּאֱמַר מִזְבַּח אֲדָמָה תַּעֲשֶׂה לִי וְגוֹ'. כָּתוּב אֶחָד אוֹמֵר אֶת עֹלֹתֶיךָ וְאֶת שְׁלָמֶיךָ, וְכָתוּב אֶחָד אוֹמֵר (דברים שם) "וְעָשִׂיתָ עֹלֹתֶיךָ הַבָּשָׂר וְהַדָּם", הָא כֵּיצָד יִתְקַיְּמוּ שְׁנֵי כְּתוּבִים הַלָּלוּ, אָמַר רַבִּי יוֹסֵי בַּר רַבִּי יְהוּדָה, מֵחֲצִי מִזְבֵּחַ וּלְצָפוֹן כַּצָּפוֹן, מֵחֲצִי הַמִּזְבֵּחַ וּלְדָרוֹם כַּדָּרוֹם. וְאֵין לִי אֶלָּא צְפוֹן הַמִּזְבֵּחַ שֶׁהוּא כָּשֵׁר לִשְׁחִיטָה, שְׁאַר כָּל צְפוֹן הָעֲזָרָה מִנַּיִן, תַּלְמוּד לוֹמַר (ויקרא יד, יג) "וְשָׁחַט אֶת הַכֶּבֶשׂ בִּמְקוֹם" וְגוֹ' שֶׁאֵין תַּלְמוּד לוֹמַר "בִּמְקוֹם הַקֹּדֶשׁ", אֶלָּא לְהַכְשִׁיר בּוֹ כָּל רוּחַ צְפוֹנִית.