The project I am working on has two different apps, 1 is server and other is client. Server app has 1 service class, which initiates server thread in onStartCommand()<
Am I reading this incorrectly? Both your server app and your client app are both on the same Android device?
In any case, take a look at the ApiDemos for code for notifications through a service.
And since you're probably going to be dealing with a remote server (and not a local one) and all the latency issues associated with the network, I think you better wrap your service in an AsyncTask.
Also learn about Broadcast Receivers, registered Broadcast Receivers can be great way to trigger Services/Activities without the need to have your own Service polling in a loop indefinitely.