sail npm run dev says container not running yet it is running.

I have a project set up on docker WSL 2. The project was not initially running in a docker container but I dockerized it. All the services are running but when I run sail npm run dev, I sail gives the following logs:

./.env: line 7: $'\r': command not found
./.env: line 11: $'\r': command not found
./.env: line 18: $'\r': command not found
./.env: line 25: $'\r': command not found
./.env: line 27: $'\r': command not found
./.env: line 31: $'\r': command not found
./.env: line 40: $'\r': command not found
./.env: line 46: $'\r': command not found
./.env: line 54: $'\r': command not found
service "web-app\r" is not running container #1

I got a post somewhere that suggested that I should add the APP_SERVICE to the .env file, I did that but still it doesn't work. What could be the problem here? This is my docker-compose.yml configuration:

version: '3'
services:
    web-app:
        build:
            context: ./vendor/laravel/sail/runtimes/8.2
            dockerfile: Dockerfile
            args:
                WWWGROUP: '${WWWGROUP}'
        image: sail-8.2/app
        container_name: web-app
        extra_hosts:
            - 'host.docker.internal:host-gateway'
        ports:
            - '${APP_PORT:-80}:80'
            - '${VITE_PORT:-5173}:${VITE_PORT:-5173}'
        environment:
            WWWUSER: '${WWWUSER}'
            LARAVEL_SAIL: 1
            XDEBUG_MODE: '${SAIL_XDEBUG_MODE:-off}'
            XDEBUG_CONFIG: '${SAIL_XDEBUG_CONFIG:-client_host=host.docker.internal}'
        volumes:
            - '.:/var/www/html'
        networks:
            - sail
        depends_on:
            - mysql
    mysql:
        image: 'mysql/mysql-server:8.0'
        ports:
            - '${FORWARD_DB_PORT:-3306}:3306'
        environment:
            MYSQL_ROOT_PASSWORD: '${DB_PASSWORD}'
            MYSQL_ROOT_HOST: '%'
            MYSQL_DATABASE: '${DB_DATABASE}'
            MYSQL_USER: '${DB_USERNAME}'
            MYSQL_PASSWORD: '${DB_PASSWORD}'
            MYSQL_ALLOW_EMPTY_PASSWORD: 1
        volumes:
            - ./sail/dump:/docker-entrypoint-initdb.d
            - ./sail/conf:/etc/mysql/conf.d
            - 'sail-mysql:/var/lib/mysql'
            - './vendor/laravel/sail/database/mysql/create-testing-database.sh:/docker-entrypoint-initdb.d/10-create-testing-database.sh'
        networks:
            - sail
        healthcheck:
            test:
                - CMD
                - mysqladmin
                - ping
                - '-p${DB_PASSWORD}'
            retries: 3
            timeout: 5s
    phpmyadmin:
      image: phpmyadmin/phpmyadmin
      links:
        - mysql:mysql
      ports:
        - 8080:80
      environment:
        MYSQL_USERNAME: "${DB_USERNAME}"
        MYSQL_ROOT_PASSWORD: "${DB_PASSWORD}"
        PMA_HOST: mysql
        UPLOAD_LIMIT: 300M
      networks:
          - sail            
networks:
    sail:
        driver: bridge
volumes:
    sail-mysql:
        driver: local

vite.config.js

import { defineConfig } from 'vite';
import vue from "@vitejs/plugin-vue";
import laravel from 'laravel-vite-plugin';

export default defineConfig({
    plugins: [
        laravel({
            input: [
                "resources/js/frontend/app.js",
                "resources/js/frontend/mobile.js",
                "resources/js/login/login.js",
            ],
            refresh: true,
        }),
        vue(),
    ],
    server: {
        hmr: {
            host: 'localhost',
        },
        watch: {
            usePolling: true
        }
    },
});