The panel's 600-page report has been seen by Tehelka magazine and the AFP news agency.
"In spite of the fact that ghastly and violent attacks had taken place on Muslims... the reaction of the government was not the type that would have been expected by anyone," they quote the report as saying.
"His [Mr Modi's] implied justification of the killings of innocent members of the minority community, read together with an absence of a strong condemnation of the violence... suggest a partisan stance at a critical juncture."
The report also said that Mr Modi had showed a "discriminatory attitude by not visiting riot-affected areas in Ahmedabad where a large number of Muslims were killed".
The panel is reported to have investigated 32 allegations related to "acts of omission and commission by the state government and its functionaries, including the chief minister".
Only a "few of these alone were in fact substantiated... [and] the substantiated allegations did not throw up material that would justify further action under the law".
Mr Modi, a leading member of the Hindu nationalist Bharatiya Janata Party (BJP), has consistently denied any wrongdoing in relation to the violence.
Last year Mr Modi appeared before the panel in connection with the murder of a former Congress party MP, Ehsan Jaffrey, who was among dozens of Muslims killed in a residential complex in the state's biggest city, Ahmedabad.
Mr Jaffrey's widow has filed a petition accusing Mr Modi of aiding and abetting his murder, a charge that has been rejected by the chief minister's party.
In the past, the Supreme Court has criticised the government of Gujarat for failing to protect its Muslim citizens.
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