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Services shot into lead through a left-footer by Keralite Rahul Ramakrishnan in the 21st minute.
Goa won 1-0 with Sadaoui's 42nd minute goal proving to be the difference.
After 120 minutes of goalless action, both sides converted most of their kicks, but Kerala's substitute Sujith V R missed the decisive one.
Manipur will meet Goa in the second semifinal on Thursday (7 pm).
Services will take on the winners of Tuesday's Mizoram-Kerala quarterfinal for a place in the summit clash.
The match will kickoff at 7 pm on March 5.
The announced names included those for 51 seats in Uttar Pradesh, 20 in West Bengal and five in Delhi.
Kerala will meet the second-placed team from Group B in the fourth quarterfinal on Tuesday (7 pm).
Odisha won 2-1 at the Kalinga Stadium in Bhubaneswar on Thursday.
The West Coast Derby has often produced fireworks, but FC Goa has not won against Mumbai City FC in the ISL in over four years.