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Note: I am disposing all the objects once used
The memory usage is the proof that you are wrong.
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Can anybody suggest me the solution to fix that?
The problem being something wrong in your code, the solution is applying specific correction to your code.
The operation of tracking the reason of problem is debugging, the tool is
debugger.
As debugging a windows service imply to stop the service execution in middle, you may need to build a specific app in order to stop your code without stopping an active service.
Any help imply having access to full code of your service and spending a lot of time just to learn what does your service and how it does it.
I fear you have to learn debugging tools.